UBS’ Best Stocks In The AI, Growth & Low Rates Era: Top 29 US Stocks

14. Corteva Inc. (NYSE:CTVA)

Number of Hedge Fund Investors In Q2 2024: 43

UBS’ Sector Rating: Neutral

Sector: Materials

Corteva Inc. (NYSE:CTVA) is a sizable agricultural supplies giant. The firm primarily sells seeds and pesticides. Even though the agriculture market has been slow this year, Corteva Inc.’s (NYSE:CTVA) stock has performed somewhat well as the shares are up 26.8% year to date. As of H1 2024, 70% of the firm’s revenue comes from its Seeds business, meaning that global food trends as well as other factors such as grain prices and food stocks play a key role in the hypothesis. Within Seeds, 69% of Corteva Inc.’s (NYSE:CTVA) revenue comes from Corn. As a result, the trends in the corn market are indispensable when trying to gauge the determinants of its share price. On this front, recent trends in the US have indicated that corn supplies in the US are at multi-year high levels. As a result, Corteva Inc. (NYSE:CTVA) might struggle in the short term as inventory stabilizes. However, the firm enjoys key advantages particularly when it comes to gene editing and seeds. Recently, it announced a fungal-resistant corn disease and similar developments could lead to tailwinds.

Corteva Inc.’s (NYSE:CTVA) management shared details about its technology strengths during the Q2 2024 earnings call:

“Earlier this year, we announced the commercial availability of Pioneer brand Z-series soybeans in the U.S. and Canada, which is the next generation of industry-leading genetics with the Enlist traits.

This new class of soybeans offers farmers a strong defensive package, with a generational leap in yield potential and agronomic performance over any soybean lineup Pioneer has ever introduced. In extensive 2023 IMPACT trials, Z-series soybeans showed an average yield advantage of 2.7 bushels per acre over our own A-series soybeans, which delivers substantial economic benefit to growers. And I know most of you are well aware of how the Enlist transition has supported our aim of becoming royalty neutral by the end of the decade, but it’s worth noting that our royalty income stream is also accelerating quickly in corn. In the first half of this year, we grew our royalty income by an impressive 40% when compared to the same period last year, led by the strength of new corn trait technologies like PowerCore Enlist.”