We recently compiled a list of the 7 Best Agriculture Stocks to Buy Right Now. In this article, we are going to take a look at where Sociedad Química y Minera de Chile S.A. (NYSE:SQM) stands against the other agriculture stocks.
Global Agriculture: Trends, Challenges, and Opportunities Ahead
The global agriculture market is currently experiencing significant changes driven by various factors, including population growth, climate change, and technological advancements.
According to a report by The Business Research Company, the global agriculture market was valued at $13.27 trillion in 2023. The market is expected to expand at a compound annual growth rate (CAGR) of 7.7% during 2024-2028 to reach a value of $19.28 trillion by the end of the forecast period. The agriculture market is primarily driven by the increasing demand for food due to a rapidly growing population, which is projected to reach 9.7 billion people by 2050 according to estimates by the United Nations.
Additionally, advancements in technology, such as precision agriculture and automation, are transforming farming practices, allowing for more efficient use of resources and higher crop yields.
The OECD-FAO Agricultural Outlook 2024-2033 highlights significant trends in the global agriculture market. Over the past 20 years, the demand for agricultural products has grown, primarily due to population and income increases in low- and middle-income countries. These nations have also boosted their production by adopting new technologies and better utilizing their natural resources.
Looking ahead, total consumption of agricultural and fisheries products is expected to rise by 1.0% annually over the next decade, mainly in low- and middle-income regions. Global food consumption is projected to increase by 1.2% each year, driven by population growth and rising incomes. Notably, the use of crops for animal feed is anticipated to grow faster than direct food consumption. This shift reflects a trend towards more animal-based diets, leading to increased livestock production.
In middle-income countries, daily calorie intake per person is expected to rise by 7% by 2033, fueled by higher consumption of staple foods, livestock products, and fats. On the other hand, low-income countries will see a modest 4% increase in calorie intake. This slower growth indicates challenges in achieving the Sustainable Development Goal of eliminating hunger by 2030.
High-income countries are also changing their dietary habits, with a slight decrease in fat and sugar intake as people become more health-conscious. Overall, these trends suggest that while there is growth in food consumption globally, disparities remain between different income levels.
Our Methodology
To compile our list of the 7 best agriculture stocks to buy right now, we used the Finviz and Yahoo stock screeners to find the largest agriculture companies. We also reviewed our own rankings and consulted various reports to compile a list of the best agriculture stocks.
From an initial pool of over 20 agriculture stocks, we focused on the stocks that analysts believe possess the greatest potential for growth. Finally, we ranked the 7 best agriculture stocks to buy right now based on their average price target upside potential according to analysts as of November 14, 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Average Upside Potential According to Analysts: 37.20%
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is a global Chilean company that develops and produces a wide range of products for several industries, such as agriculture, health, nutrition, and renewable energy. The company produces and markets fertilizers such as potassium nitrate and sodium nitrate. Sociedad Química y Minera de Chile S.A. (NYSE:SQM) also produces lithium and iodine, which are essential for many applications.
In the first half of 2024, the company reported revenues of $2.37 billion, down from $4.31 billion during the same period last year. Despite this decline, the company saw strong sales growth in lithium, iodine, and fertilizers. Lithium and iodine businesses reached record levels. Fertilizer demand also rebounded significantly, rising more than 20% compared to last year.
The company’s recent quarterly performance can be said to be less than ideal. However, Sociedad Química y Minera de Chile S.A. (NYSE:SQM) has achieved a compound annual growth rate of 10% in revenue over the last 10 years, demonstrating resilience and adaptability.
Although Sociedad Química y Minera de Chile S.A. (NYSE:SQM) faced lower average prices for lithium due to market conditions, its long-term growth prospects remain strong. During the second quarter of 2024, the company entered into a partnership with Codelco to develop lithium assets in the Salar de Atacama until 2060. Additionally, Sociedad Química y Minera de Chile S.A. (NYSE:SQM) launched SQM International Lithium to expand its lithium business outside of Chile, further diversifying its portfolio.
Analysts currently recommend SQM stock as a buy, with a median one-year price target suggesting a potential upside of 37% from its current price.
With ongoing demand for lithium and fertilizers expected to grow, coupled with strategic partnerships and expansion plans, Sociedad Química y Minera de Chile S.A. (NYSE:SQM) presents a compelling opportunity for investors looking for growth.
Overall, SQM ranks 3rd on our list of the best agriculture stocks to buy right now. While we acknowledge the potential of SQM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SQM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
