Limoneira Company (LMNR): How to Invest in Agricultural Land Assets

As with any publicly traded asset, the share price has fluctuated, although the capital value of the underlying farmland assets has remained extremely stable. At the end of January this year, shares were available at $14.90, and by April 17 had climbed significantly to $17.68 (a rise of 18.6% over 76 days). The current trading price is around $16.80.

Limoneira Company (NASDAQ:LMNR) is an agribusiness, farming and real estate company that currently owns and operates over 7,000 acres of farmland in the United States. The company produces and sells fruit and develops real estate. The price of shares in the company has fluctuated wildly over the past five years. In May 2008, the price started at $27.50 but dropped off to $11.50 by November. Since then the price has wavered, reaching $27.65 in June 2012 only to drop to $16.49 within three months, and then back up again to $28.70 in December. The price seems to have stabilized and currently sits at $21.69.

Investing in the wider agricultural sector

For investors seeking exposure to the agriculture sector in general, there are almost limitless options to invest in listed companies that operate in the sector and are poised to benefit from sector-wide growth in demand for products. For instance, Archer Daniels Midland Company(NYSE:ADM) is a diversified agricultural producer and processor headquartered in Decatur, Ill., with operations on six continents. The company has over 30,000 employees, more than 265 processing plants and net sales for the fiscal year ended June 30, 2011 of $81 billion.

As with most equities, the share price of ADM plummeted during the global financial crisis, from $43.17 in May 2008, to $15.45 five months later, a drop-off of more than 64%, although pricing stabilized quite quickly and has traded between $23.77 and $36.75 since. Currently shares are available at $34.62.

The bottom line

The widening gap between supply and demand will put those with a stake in productive agricultural land in a lucrative position.

Whether choosing to invest in farmland directly or via vehicles or companies, adding farmland assets to your portfolio offers an attractive level of capital security, inflation hedging, income and growth.

The article How to Invest in Agricultural Land Assets originally appeared on Fool.com and is written by Vikki Geary.

Vikki Geary has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Vikki is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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