People have been farming for roughly 12,000 years and agriculture remains a prominent industry. Agriculture stocks are a desirable long-term investment because the amount of food produced must increase if we are to feed 10 billion people in 2050 – 2 billion more than today.
Companies are looking at ways to increase crop production and the efficiency of farming. The big trend to watch is which of them are able to apply precision agriculture, using computing power and software in farming to fuel their growth.
In many ways, 2023 was a tough year for farming stocks as falling commodity prices cut into farmer’s incomes, which meant they spent less on equipment. This may create an opportunity to snap up agriculture stocks at reasonable prices. In this article, we feature 10 of the best.
Best Agriculture Stocks to Buy in 2024
A Closer Look at the Best Agriculture Stocks to Invest in
Let’s take an in-depth look at the best agriculture stocks to invest in right now:
1. Deere & Co. – Growing Number of Digital Products Drives Sales
The world’s largest maker of farm machinery just signed a deal with SpaceX’s Starlink subsidiary to connect farm machinery to the internet in areas that otherwise don’t have internet service. This will make it easier for customers to use Deere’s growing line of digital products, including driverless tractors and smart herbicide spraying.
Deere had double-digit percentage gains in revenue and earnings per share (EPS) in fiscal 2023, including $61.2 billion in revenue, up 16% and EPS of $34.63, up 48.7%. Sales did fall 1%, year over year in the fourth quarter, to $15.4 billion, but fourth-quarter EPS rose 11% over the same period last year to $8.26.
Deere just raised its quarterly dividend by 8.8% to $1.47, lifting it for the fourth consecutive year.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
NYSE: DE
-45.9%
10.51
1.62%
2. Bioceres Crop Solutions – Small Company With Big Growth
Bioceres is already seeing growth and thanks to Argentine president Javier Milei’s decision to devalue his country’s peso, farmers in his country have more money to spend on the products sold by Bioceres.
In other ways, the drought, which ended this past summer, helps the company’s business because it sells drought-resistant soybean and wheat seeds. The company has also been able to reduce its net debt by more than half what it was a year ago.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
NASDAQ: BIOX
17.03%
37.97
N/A
3. Bunge Global – Oilseed Producer Entering Oversold Territory
Bunge is the world’s leader in oilseed processing and a leading producer and supplier of specialty plant-based oils and fats. In the fourth quarter of 2023, it reported revenue of $14.94 billion, down 10.3%, year over year, but EPS was $4.18 compared to $2.21 in the same period last year.
The company has increased its quarterly dividend for three consecutive years, including a 6% raise last year to $0.66.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
NYSE: BG
-9.85%
6.03
2.96%
4. AGCO – Merger With Trimble Should Drive Greater Profits
AGCO is known for its familiar farming equipment brands, from Fendt to Massey Ferguson. In 2023, it posted revenue of $14.4 billion, up 13.9% and net income of $1.17 billion, up 33.9%, or $15.63 in EPS, up 31.6% over 2022. The farm machinery maker points toward its precision-agriculture merger with Trimble as opening up more long-term sales opportunities, beyond tractors and combines and the like.
The key will be how the merger with Trimble (NASDAQ: TRMB) works out. In the meantime, the stock is trading at less than eight times earnings. AGCO has increased its quarterly dividend for 10 consecutive years, including a 20.8% jump last year to $0.29 per share.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
NYSE: AGCO
-18.64%
7.09
1.05%
5. Dole – Fresh Food Supplier Streamlining Its Process for More Profit
Dole is the world’s largest fresh produce company, selling fruits and vegetables in more than 75 countries. The slowdown in commodity prices hasn’t hurt its bottom line, thanks to growth in its Diversified Fresh Produce division, particularly in Ireland, the U.K., Spain and the Netherlands.
The company operates in three segments, but soon it will be only two as it is selling its Fresh Vegetables division to Fresh Express for $293 million, pending approval from regulators. The segment saw slower growth than its other segments, as it was facing increased competition. The company’s quarterly dividend is $0.08.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
NYSE: DOLE
-3.26%
9.61
2.92%
6. CNH Industrial – Underrated Gem and Good Long-Term Value Play
The No. 2 seller of tractors, behind Deere & Co., appears to be a bargain, trading at just seven times earnings. Part of the reason for the lower valuation is unfamiliarity, even though the company has dealerships in five continents and its Case and Case IH brands are well known. Just two years ago, CNH was still part of Iveco, which was then Fiat’s bus and truck business. Fiat then spun off Iveco, leaving CNH Industrial as a separate company that sold heavy equipment.
The company, between its recent share repurchases and its quarterly dividend, delivers significant shareholder return. CNH is in the midst of buying back $1 billion worth of stock. Its dividend was raised by 27.4% last year to $0.39.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
NYSE: CNHI
-24.44%
7.03
3.20%
7. Ingredion – Strong Year Despite Challenges in Its Markets
Ingredion is often overlooked as a stock because it doesn’t make products that people can buy on the shelves. Instead, it turns grains, fruits, vegetables, and other plant materials into ingredients for the food, brewing, animal nutrition and industrial markets. The lower prices of commodities worked in its favor.
In 2023, it raised prices and cut expenses and set records in 2023 with $8.2 billion in revenue, up 3%, $957 million in operating income, up 26% and adjusted EPS of $9.42, up 23%. It has been able to increase margins for the past six quarters. Ingredion, in its earnings report, said that its customer destocking has run its course, so it expects sales volume to pick up this year. It also raised its quarterly dividend for the 13th consecutive year last year, giving it a 9.8% bump to $0.78.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
NYSE: INGR
14.94%
11.82
2.75%
8. Greenyard – The Best Agricultural Turnaround Story
Greenyard, which focuses on prepared fresh fruits and vegetables, has a new CEO, Francis Kint, who on Jan. 1, took over from co-CEOs Hein Deprez and Marc Zwaaneveld. Kint had been CEO of the company’s frozen foods division. The company was able to increase revenue in 2023, unlike other competitors in Europe, passing along increased costs with higher prices.
Greenyard, which lost money in 2019 and 2020, is showing continued signs of recovery. It paid down €316 million of net debt in the first quarter and restarted its dividend policy last year after a five-year hiatus, starting at €0.10 per share.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
LON: OJZ8
-15.02%
0.002
1.83%
9. Lindsay Corporation – Expanding and Expecting Stronger 2024
Lindsay struggled last year as demand for its irrigation and infrastructure products fell. The lower prices for commodities led to farmers being conservative in their spending and that hurt Lindsay’s bottom line. The company’s revenue and earnings were still down in the first quarter of fiscal 2024, but there appears to be signs of a comeback. Demand in North America, the company’s largest market, grew. If interest rates fall and international markets, particularly South America, return to normal, the stock will be a sound buy.
The company just announced it is planning on spending $50 million to upgrade its manufacturing facilities, adding more data connectivity, and using more automation and robotics. It is also expanding its facility to allow for increased capacity. Those are the plans of a company that is expecting business to pick up and becoming more automated will allow it to improve margins. The company has increased its quarterly dividend for 21 straight years, including a 2.9% raise last year to $0.35.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
NYSE: LNN
-19%
19.98
1.12%
10. Gladstone Land – Top Agriculture Stock for Patient Investors
Gladstone’s shares have dropped nearly 8% over the past year. The REIT has had to deal with struggling tenants and rising interest rates have made it more expensive for the company to expand. However, the stock has plenty going for it, including a monthly dividend that has increased 33 times over the past 36 quarters.
In the third quarter, Gladstone reported funds from operations (a better metric for REITs than net income) of $6.3 million, down 1.3%, year over year and revenue of $23.5 million, down 2.8% over the same period a year ago. Despite that, Gladstone increased its monthly dividend by 1% to $0.0465.
Ticker
One-year price change:
P/E Ratio
Dividend Yield
NASDAQ: LAND
-29.40%
-0.29
4.18%
Agriculture is a broad industry, running the gamut from companies that make feed, pesticides and agricultural products, to food processing businesses, heavy machinery manufacturers and pure-play agriculture growing companies. It makes sense to be familiar with one sub-sector to understand the dynamics behind a company’s business. What’s bad for growers may be good for fresh produce distributors, for example. Companies that are consistently profitable and have regular revenue growth can easily ride out short-term issues. Look for companies that are established enough to offer above-average dividends as that’s generally a sign of stable cash flows. Archer Daniels Midland, one of the largest agriculture companies, didn’t make the list because the company just put its Chief Financial Officer on leave while the company looks at potential accounting irregularities. That’s the type of information that can hugely impact a stock’s future price.How to Find the Best Agriculture Stocks
Focus on a sub-sector to study
Stick to the fundamentals
Follow industry trends and news
Where to Get Agriculture Stock Tips and Insights
Investors interested in agriculture stocks should look at AltIndex, a subscription-based service that utilizes alternative data and artificial intelligence (AI) to rate stocks. AltIndex updates its data throughout the day.
The service utilizes a variety of data sources, such as web searches, customer satisfaction ratings, social media, app downloads, to help it analyze a company.
AltIndex takes that information to compare stocks to similar stocks, using AI to find investment insights. Stocks are scored from 1 to 100, simplifying selections for investors.
AltIndex has more than 10,000 members and provides more than 100,000 stock insights and alerts each day, and has a strong win rate of 75% from its AI stock picks.
You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well many other useful features.
Conclusion
Agriculture stocks have, for the most part, not kept up with the overall market rebound over the past year. While the S&P 500 Index is up 18% over the past year, the Invesco DB Agriculture Fund (NYSEARCA: DBA) is up a little more than 8% in that period while the iShares MSCI Global Agriculture Producers ETF (NYSEARCA: VEGI) is down 6% over the past year.
That underperformance, though, is not expected to last as the growing need for crops and the increased use of automation should drive commodity prices back up and help the sector deliver stronger margins.
Some of the above-listed stocks are well-priced and provide good long-term potential. In the meantime, more than half of them deliver above-average dividends that allow investors to be patient while they wait for their shares to climb.
References
https://lindsay.irpass.com/profiles/investor/NewsPrint.asp?v=6&b=1278&ID=130196&m=rl&g=684
