In this article, we will look at the top 10 agriculture stocks to buy according to billionaire Mario Gabelli. If you want to skip reading about Mario Gabelli’s investment philosophy and why he likes the agriculture sector right now, you can go directly to Top 5 Agriculture Stocks to Buy According to Billionaire Mario Gabelli.
Mario Gabelli is a billionaire equity investor, advisor, and financial analyst. Mr. Gabelli is the founder and hedge fund manager of GAMCO Investors, a New York-based hedge fund that uses a bottom-up, structural investing approach to invest in both growth and value stocks. According to Forbes, Mr. Gabelli’s net worth as of September 16, sits at $1.7 billion. Mario Gabelli has been in the investment business for over 5 decades now. He has grown GAMCO Investors into a billion-dollar hedge fund. As of June 30, Mr. Gabelli manages roughly $9.1 billion in 13F securities through his hedge fund.
The veteran stock market expert has built a reputation for himself in the finance industry for his expert analyses on equities and markets. Mr. Gabelli has been rooting for agriculture in 2022 and sees the industry performing relatively well in an inflationary and high interest rate environment, as compared to other industries. On September 9, Mr. Gabelli appeared on CNBC’s Squawk Box where the stock market expert talked about a few companies he likes in the agriculture space. Here are some comments from the legendary investor about why he is bullish on the agriculture industry:
“When we look at companies, we look at sectors that will do okay over the next several years but also have interesting companies. In that regard, we take a microscope to the P&L and the balance sheet. For example, companies that have commodities as pricing are in the manufacturing sector. They price on LIFO, last in of a good, they price it as first out… Then we worry about currencies, and we worry about taxes…When we look at that, we say okay what do we like? We want to buy agricultural companies. This year, $535 billion of cash, up from $400 and odd billion, goes into the farmers… So we like companies like Deere (NYSE:DE), but what we particularly like at the moment is Case New Holland (NYSE:CNHI)… So that’s an area that we like. We visit the companies, we go out and try to “kick the tires” on the equipment…”
Investing in agriculture has long been an investor’s top hedge against inflation. The agriculture industry is a direct beneficiary of inflation since the sector has the ability to pass on rising prices to consumers. According to Mr. Gabelli, the agriculture industry has “commodities as pricing”. Some of GAMCO Investors’ top agriculture stock picks include Archer Daniels Midland Company (NYSE:ADM), Deere & Company (NYSE:DE), and CNH Industrial N.V. (NYSE:CNHI).
Our Methodology
To determine the top 10 agriculture stocks to buy according to billionaire Mario Gabelli, we reviewed GAMCO Investors’ Q2 2022 investment portfolio and looked for companies that are operating in the agriculture segment. We preferred pure-play agriculture companies that were ranked among the fund’s top holdings and we ranked them in increasing order of GAMCO Investors’ stake in them.
Top 10 Agriculture Stocks to Buy According to Billionaire Mario Gabelli
10. PACCAR Inc (NASDAQ:PCAR)
GAMCO Investors’ Stake Value: $2,194,000
Percentage of GAMCO Investors’ 13F Portfolio: 0.02%
Number of Hedge Fund Holders: 25
PACCAR Inc (NASDAQ:PCAR) is a leading global manufacturer of farm and heavy construction machinery. The company is most known for its farming and grain trucks which it sells under the Kenworth, Peterbilt, and DAF labels. PACCAR Inc. (NASDAQ:PCAR) has three business divisions: Truck, Parts, and Financial Services. At the end of Q2 2022, 25 hedge funds were long PACCAR Inc. (NASDAQ:PCAR) and held stakes worth $326.9 million in the company. This is compared to 30 positions in the previous quarter with stakes worth $253 million.
On July 27, Deutsche Bank analyst Nicole DeBlase raised her price target on PACCAR Inc (NASDAQ:PCAR) to $97 from $94 and reiterated a Hold rating on the shares.
On September 13, PACCAR Inc (NASDAQ:PCAR) announced that its board of directors has declared a quarterly cash dividend of $0.37 per share of common stock, up 9% from its prior dividend of $0.34. The dividend is payable on December 6 to investors of record at the close of business on November 15. As of September 16, PACCAR Inc (NASDAQ:PCAR) is offering a forward dividend yield of 1.74% and has free cash flows of $837.7 million to support it.
As of June 30, GAMCO Investors’ stake in PACCAR Inc (NASDAQ:PCAR) is valued at $2.19 million. The investment covers 0.02% of Mario Gabelli’s 13F portfolio.
Some of the best agriculture companies that make up the top 13F holdings of GAMCO Investors include Archer Daniels Midland Company (NYSE:ADM), Deere & Company (NYSE:DE), and CNH Industrial N.V. (NYSE:CNHI).
9. Lindsay Corporation (NYSE:LNN)
GAMCO Investors’ Stake Value: $7,903,000
Percentage of GAMCO Investors’ 13F Portfolio: 0.08%
Number of Hedge Fund Holders: 14
Lindsay Corporation (NYSE:LNN) is a water management and road infrastructure company that operates in the United States and internationally. The company has two business segments: Irrigation and Infrastructure. As of June 30, GAMCO Investors’ stake in Lindsay Corporation (NYSE:LNN) sits at $7.9 million and makes it the fourth-largest shareholder in the company. The investment covers 0.08% of billionaire Mario Gabelli’s 13F portfolio.
On June 30, Lindsay Corporation (NYSE:LIN) announced earnings for the third quarter of fiscal 2022. The company reported earnings per share of $2.28 and outperformed estimates by $0.68. The company generated a revenue of $214 million, up 32% year over year, and beat expectations by $25 million.
On August 1, Roth Capital analyst Brian Wright raised his price target on Lindsay Corporation (NYSE:LIN) to $160 from $135 to reflect and reiterated a Neutral rating on the shares.
At the end of Q2 2022, 14 hedge funds held stakes in Lindsay Corporation (NYSE:LIN) worth $128 million. This is compared to 14 positions in the previous quarter with stakes worth $199.45 million.
8. Bunge Limited (NYSE:BG)
GAMCO Investors’ Stake Value: $8,439,000
Percentage of GAMCO Investors’ 13F Portfolio: 0.09%
Number of Hedge Fund Holders: 48
Bunge Limited (NYSE:BG) is a leading global agribusiness and food company, headquartered in Missouri, United States. The company does business through four segments: Agribusiness, Refined & Specialty Oils, Milling, and Sugar & Bioenergy. On August 11, Bunge Limited (NYSE:BG) declared a quarterly cash dividend of $0.625 per share. The dividend is payable on December 2 to investors of record on November 18. As of September 16, Bunge Limited (NYSE:BG) is offering a forward dividend yield of 2.74% and has gained 11% over the past twelve months.
On August 12, Wolfe Research analyst Sam Margolin initiated coverage of Bunge Limited (NYSE:BG) with a buy-side Outperform rating and a $127 price target. The analyst sees upside to the company’s growth guidance in a stronger commodity price environment.
At the end of Q2 2022, 48 hedge funds were bullish on Bunge Limited (NYSE:BG). The total stakes of these hedge funds amounted to $729 million. GAMCO Investors’ stake in the company, at the end of June, was valued at $8.43 million. The investment covers 0.09% of the fund’s 13F portfolio.
Here is what Old West Investment Management had to say about Bunge Limited (NYSE:BG) in its first-quarter 2022 investor letter:
“Bunge (pronounced BUN-GEE) Ltd (NYSE:BG) is one of the biggest agribusinesses and food companies in the world. There are four worldwide companies that dominate the sector, the others being Archer-Daniels-Midland Cargill, and Dreyfuss. One of our favorite ways to screen for new ideas is following insider buying. When I saw the Form 4 filed by new Bunge CEO Greg Heckman, his purchase of $9 million of BG stock intrigued me. My initial thought was the company gave him the stock as a signing bonus. I contacted BG Investor Relations and asked whether it was a signing bonus or did Heckman actually write a check for $9 million. IR assured me it was his own hard-earned money that he invested in the company he was about to run.
Heckman was a long time executive at Conagra Foods who obviously sensed opportunity at BG. One of his first moves as CEO was to move the company’s HQ from New York to St. Louis, right in the middle of America’s breadbasket. BG had been plagued for years with poor decisions by underperforming management. Heckman’s decision to move to St. Louis was indicative of a no-nonsense style and he would commence cutting expenses and selling non-core assets…” (Click here to see the full text)
7. Corteva, Inc. (NYSE:CTVA)
GAMCO Investors’ Stake Value: $11,557,000
Percentage of GAMCO Investors’ 13F Portfolio: 0.12%
Number of Hedge Fund Holders: 42
Corteva, Inc. (NYSE:CTVA) operates in the agriculture business through two segments: Seed and Crop Protection. Wall Street is bullish on Corteva, Inc. (NYSE:CTVA). On September 14, Morgan Stanley analyst Vincent Andrews maintained his $70 price target and buy-side Overweight rating on Corteva, Inc. (NYSE:CTVA) and also reiterated that Corteva, Inc. (NYSE:CTVA) is his “Top Pick”. On September 15, Deutsche Bank analyst David Begleiter raised his price target on Corteva, Inc. (NYSE:CTVA) to $75 from $68 and reiterated a Buy rating on the shares.
On August 4, Corteva, Inc. (NYSE:CTVA) announced earnings for the fiscal second quarter of 2022. The company generated a revenue of $6.25 billion, up 11.1% year over year, and outperformed Wall Street consensus by $162.8 million. The company reported earnings per share of $1.64 and beat estimates by $0.18. As of September 16, Corteva, Inc. (NYSE:CTVA) has gained 30.8% year to date.
As of June 30, GAMCO Investors’ stake in Corteva, Inc. (NYSE:CTVA) is valued at $11.5 million. The investment covers 0.12% of Mario Gabelli’s 13F portfolio.
At the end of Q2 2022, 42 hedge funds were bullish on Corteva, Inc. (NYSE:CTVA) and held stakes worth $966.4 million in the company. This is compared to 39 positions in the preceding quarter with stakes worth $1.35 billion.
Here is what Aristotle Capital Management had to say about Corteva, Inc. (NYSE:CTVA) in its first-quarter 2022 investor letter:
“Corteva Agriscience, one of the world’s largest seed and crop protection companies, was a primary contributor for the quarter. Due to its respected brand and the value-added benefits of its patented seeds and crop protection solutions for farmers, Corteva has been able to more than offset input cost inflation with sustainable price increases. In addition, the company’s ongoing mix shift to higher-margin, premium products, a catalyst we previously identified, is aiding both sales and profit growth. Shares were likely also buoyed by the rise in crop prices. Market participants, perhaps eager to chase short-term trends, poured into the sector. At Aristotle Capital, we look past such gyrations and, as long-term investors, do not attempt to predict short-term changes in commodity prices. We remain excited about what we view to be high-quality characteristics and fundamental improvements that permeate Corteva’s business, not the least of which include its pricing power.”
Like Archer Daniels Midland Company (NYSE:ADM), Deere & Company (NYSE:DE), and CNH Industrial N.V. (NYSE:CNHI), Corteva, Inc. (NYSE:CTVA) is one of the pure-play agriculture stocks to buy according to billionaire investor, Mario Gabelli.
6. FMC Corporation (NYSE:FMC)
GAMCO Investors’ Stake Value: $11,791,000
Percentage of GAMCO Investors’ 13F Portfolio: 0.12%
Number of Hedge Fund Holders: 29
FMC Corporation (NYSE:FMC) is a leading agrisciences company that provides crop protection, plant health, and professional pest and turf management products and services. On August 2, FMC Corporation (NYSE:FMC) announced earnings for the second quarter of fiscal 2022. The company reported earnings per share of $1.93 and beat estimates by $0.04. FMC Corporation (NYSE:FMC) generated a revenue of $1.45 billion for the quarter, up 16.9% year over year, and outperformed Wall Street expectations by $122.48 million. As of September 16, the stock has gained 11.23% over the past twelve months.
As of June 30, GAMCO Investors’ stake in FMC Corporation (NYSE:FMC) sits at $11.79 million, which accounts for 0.12% of its 13F portfolio.
On July 20, KeyBanc analyst Aleksey Yefremov upgraded FMC Corporation (NYSE:FMC) to Overweight from Sector Weight and reiterated his $122 price target on the shares On July 29, Mizuho analyst Christopher Parkinson revised his price target on FMC Corporation (NYSE:FMC) to $149 from $155 and maintained a Buy rating on the shares.
At the end of Q2 2022, 29 hedge funds were long FMC Corporation (NYSE:FMC). The total stakes of these hedge funds amounted to 361 million, up from $309.6 million in the previous quarter with 26 positions. The hedge fund sentiment for the stock is positive.
Here is what investment management firm, Aristotle Capital Management, had to say about FMC Corporation (NYSE:FMC) in its first-quarter 2022 investor letter:
“FMC is an agricultural sciences company providing solutions for the protection of crops from different pests. Its products are used by farmers to ensure bugs, weeds and fungi do not negatively impact their harvest. Headquartered in Philadelphia, Pennsylvania, the company has a rich history dating back to 1883 when inventor John Bean set out to build a better insecticide spray pump. Over the decades, through acquisitions, FMC became a disparate collection of chemical companies. FMC has transformed itself to solely focus on crop chemicals, having acquired DuPont’s crop chemicals portfolio in 2017, and completed the separation of its lithium business in 2019. FMC is now one of the largest patented crop protection companies globally.
Its presence is balanced both geographically around the world, as well as from a crop exposure standpoint, with soybeans being the largest at roughly 20% of total revenue. In terms of products, FMC’s portfolio skews toward insecticides, which account for over 60% of its revenue. The remainder are herbicides (~25%), as well as fungicides and other crop chemicals (~15%).
High-Quality Business
Some of the quality characteristics we have identified for FMC include:
- Strong portfolio of brands allowing for differentiation outside of price, as many customers refer to the brand name, not the active ingredient;
- Strong competitive position with many products being either protected by patents or niche products, perhaps unlikely to be targeted by generics;
- Oligopolistic industry, as FMC is one of just five companies that collectively contribute the majority of research and development performed on crop protection chemicals; and
- Capable management team with operational experience and ability to commercialize new products.
Attractive Valuation
We believe FMC’s current stock price is offered at a discount to our determination of the company’s intrinsic value given our estimates of both enhanced margins and higher earnings on a normalized basis.
Compelling Catalysts
Catalysts we have identified for FMC, which we believe will cause its stock price to appreciate over our three- to five-year investment horizon, include:
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FMC is poised to benefit from its focus on crop chemicals, as yield gains are needed to support rising food consumption in emerging markets;
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Continued margin improvements from its product pipeline. These new products should be particularly effective against insects, weeds and fungi that have grown resistant to traditional crop chemicals; and
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Further cross-selling of FMC products to DuPont customers. For example, in Argentina, 78% of the customers it gained from the DuPont acquisition were unique to FMC, providing cross-selling opportunities.”
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Disclosure. None. Top 10 Agriculture Stocks to Buy According to Billionaire Mario Gabelli is originally published on Insider Monkey.
