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 Vital Farms Inc. (NASDAQ:VITL) 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).
A flock of pasture-raised chickens outdoors in their natural habitat.
Vital Farms Inc. (NASDAQ:VITL)
Average Upside Potential According to Analysts: 43.86%
Vital Farms Inc. (NASDAQ:VITL) is an agriculture company that produces and sells eggs and dairy products. As a national consumer brand, the company works with family farms to offer a range of ethically produced foods in the US. Vital Farms Inc.’s (NASDAQ:VITL) products include shell eggs, butter, hard-boiled eggs, and liquid whole eggs. Their products are available in more than 24,000 stores nationwide.
In the third quarter of 2024, the company reported an impressive 31.3% increase in net revenue, reaching $145 million, compared to $110.4 million in the same quarter last year. This growth was driven by a rise in sales volume. In the first nine months of the year, the company has managed to grow its sales by 31%.
Looking ahead, Vital Farms Inc. (NASDAQ:VITL) is focused on expanding its operations. In June, the company announced plans to open a new Egg Central Station (ECS) facility in Seymour, Indiana. This facility will enhance their egg washing and packing capabilities, building on the success of their existing operations in Springfield, Missouri. The expansion is part of their strategy to reach a net revenue target of $1 billion by 2027.
Over the past 3 years, Vital Farms Inc. (NASDAQ:VITL) has managed to grow its top line at a compound annual growth rate of 34%, while its bottom line surged at an impressive CAGR of 111%.
Analysts also have a positive outlook on Vital Farms Inc. (NASDAQ:VITL). The 1-year median price target of $41.00 set by analysts indicates a potential upside of 43% from current levels.
With strong financial performance and ongoing investments in capacity growth, Vital Farms Inc. (NASDAQ:VITL) is well-positioned for future success. VITL ranks among the best agriculture stocks to buy right now.
Overall, VITL ranks 2nd on our list of the best agriculture stocks to buy right now. While we acknowledge the potential of VITL 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 VITL 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.
