We recently published a list of 8 Worst Small Cap Agriculture Stocks to Buy. In this article, we are going to take a look at where Vital Farms, Inc. (NASDAQ:VITL) stands against other worst small cap agriculture stocks to buy.
To supply the world’s demands for food and raw materials, the agriculture sector—which includes growing crops and rearing livestock—is essential to global sustainability. According to data from the Business Research Company, the industry is predicted to expand at a compound annual growth rate (CAGR) of 7.9% from $14.36 trillion in 2024 to $15.50 trillion in 2025, demonstrating its continued importance as a pillar of the global economy. Despite its value, the industry has experienced structural changes throughout the years due to resource management, changing global demand, and technological improvements.
However, fears concerning stunted productivity and sustainability have appeared in recent years, creating obstacles for long-term growth. A significant shift in the sector has been the growing contribution of the Global South—Africa, Asia, and Latin America—which has accounted for 73% of world agricultural output by 2020. McKinsey & Company predicts that as these rising markets modernize their agricultural processes, their proportion of production will grow even more. This change has been fueled by advances in crop science, irrigation techniques, and mechanization, which have enabled larger yields with the same land resources. Furthermore, reducing inflation in the United States around the end of 2024 has helped reduce input costs, notably in energy, resulting in higher margins for agricultural producers.
Despite these encouraging signs, the industry’s efficiency, as measured by Total Factor Productivity (TFP), has slowed. The global TFP growth rate decreased from 1.6% in the early 2000s to 0.9% during the past decade. With food consumption expected to increase by 60% by 2050, sluggish productivity raises concerns about future food security, price increases, and increased environmental constraints. Likewise, The Farm Products sector has experienced negative year-to-date and one-year returns. In contrast, global food commodity prices rose in February 2025, driven by rising sugar, dairy, and vegetable oil costs.
To address these difficulties, the sector is focusing on sustainability-driven solutions, notably connected agriculture. This entails the use of advanced technologies to improve, manage, and regulate farming operations. Advances in digital technologies have made it feasible to collect and use massive amounts of data at low cost, hence increasing crop yields while reducing resource consumption, such as water, fertilizers, and seeds. According to Fortune Business Insights, the global connected agricultural market was valued at $1.84 billion in 2018 and is expected to grow to $7.22 billion by 2026, with a CAGR of 19.1% over the forecast period. In 2018, North America dominated the global market, accounting for a 34.06% share in 2018.
Given these characteristics, maintaining agricultural expansion would necessitate major investment in next-generation farming technologies and sustainable practices. According to McKinsey & Company, advances in agricultural technology have the potential to deliver a 25% rise in global output over the next decade while improving efficiency and lowering environmental impact. Meanwhile, the sector remains a crucial engine of the US economy, accounting for more than $1.5 trillion in GDP in 2023, or 5.5% of economic output.
Agriculture is the foundation of global economic stability, supporting billions of people globally. However, despite its central role, not all stocks in the industry have performed well.
Our Methodology
For this article, we started by using Finviz screeners to identify stocks in the agricultural inputs and farm products industries. From this expanded list, we chose companies with strong market capitalization. Next, we looked at how many hedge funds were invested in these companies because we believe that stocks with a high level of hedge fund interest do well. Finally, we determined the short percentage of float for each firm, which represents the level of negative sentiment or short interest in the stock. The companies were then sorted in ascending order according to their short proportion of float.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A flock of pasture-raised chickens outdoors in their natural habitat.
Vital Farms, Inc. (NASDAQ:VITL)
Number of Hedge Fund Holders: 30
% of Short Float: 20.68%
Vital Farms, Inc. (NASDAQ:VITL) is a U.S.-based food firm that specializes in pasture-raised shell eggs, butter, and associated goods. The company acquires its products from more than 425 family farms and distributes them to retailers and food service operators. It is continuing to expand its production capacity and supply chain to meet rising demand, establishing itself as a pioneer in ethical food manufacturing.
Vital Farms, Inc. (NASDAQ:VITL) posted solid financial performance for the fourth quarter that ended December 29, 2024, exceeding expectations. The company reported an EPS of $0.23, which exceeded the projected $0.15. Net revenue for the full fiscal year 2024 was $606.3 million, a 28.5% increase year-over-year. Higher sales volumes, brand expansion, and an increase in the number of family farms all contributed to growth. Additionally, butter sales increased by 11% year-on-year, contributing to overall revenue growth. However, supply shortages damaged year-end inventory, resulting in a predicted temporary slowdown in early 2025 growth.
As of the writing of this article, Vital Farms, Inc. (NASDAQ:VITL) stock fell by nearly 16% year to date due to an issue with its accounting practices overshadowing better-than-expected earnings. According to Bloomberg, the company discovered anomalies in order tracking and invoicing, which had an impact on reported revenue and raised questions about financial integrity. While it has generally avoided the brunt of the avian flu’s effects, these reporting flaws have weighed on investor confidence. The stock’s slide reflects increased volatility in some of the worst-performing small-cap agricultural equities, underscoring investor concern in the sector.
Despite industry-wide issues such as avian influenza, which has reduced egg supply, Vital Farms, Inc. (NASDAQ:VITL) is taking proactive initiatives to manage risks. It wants to develop its egg grading and packing facilities in Missouri, increasing production capacity by 30% by the end of 2025. The company is also recruiting new farms, with 125 more expected to be completely operational by the fourth quarter of 2025. These developments will increase supply chain resilience and help satisfy rising customer demand.
Overall, VITL ranks 1st on our list of worst small cap agriculture stocks to buy. While we acknowledge the potential of VITL, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
