Agriculture and farmland are some of the most indispensable industries that contribute significantly to the global economy. According to the World Bank, the agriculture industry accounts for around 4% of the global GDP, and in some developing countries, the industry accounts for over 25% of the GDP. The World Bank estimates that the global population will reach 10 billion by 2050, which can cause significant concerns related to food security.
Sector Performance
As we mentioned in our previous agriculture and farmland stocks article, the industry stocks saw a major decline during the COVID-19 recession and post-Russia-Ukraine war. However, the agriculture industry stayed resilient and 12 months after the COVID-19 recession ended on April 20, 2020, iShares MSCI Agriculture Producers ETF (NYSEARCA:VEGI) and VanEck Agribusiness ETF (NYSEARCA:MOO) gained 110% and approximately 97%, respectively. In 2022, the Russia-Ukraine war pushed commodity prices higher which led to a rally in the industry but the agriculture industry stocks faced a sharp decline soon after and haven't recovered to their April 2022 highs yet. Since their highs of April 14, 2022, iShares MSCI Agriculture Producers ETF (NYSEARCA:VEGI) and VanEck Agribusiness ETF (NYSEARCA:MOO) are down 23.53% and 30.8%, as of May 9, respectively.
Although the industry hasn't been doing well in the current year, Deere & Company's (NYSE:DE) CFO, Josh Jepsen believes that the "fundamentals for farmer financials are still strong". On February 15, he told CNBC that balance sheets and land values are strong and debt-equity ratios are quite low and the industry is doing much better than how it was around a decade ago.
Due to the underperformance of the agriculture and farmland industry, some big names in the industry provide ample entry points for investors as they are trading at low multiples. As of May 9, Deere & Company (NYSE:DE) is trading at an earnings multiple of 11.9x and agribusiness company Bunge Global SA (NYSE:BG) is trading at 12.66x. Bunge Global SA (NYSE:BG) reported its Q1 2024 earnings on April 24 and said it generated a revenue of $13.42 billion. The company posted an EPS of $3.04, ahead of market consensus by $0.51. The company maintained its full-year EPS outlook at $9.00. The company's CEO, Greg Heckman said:
"Our team's capabilities and our global platform again demonstrated we can navigate shifts in supply and demand with agility and speed. Our focus remains on delivering great value to all stakeholders, while investing to strengthen our business, so that we can provide customers with solutions not only today but over the longer term. We are making excellent progress on integration planning for our announced combination with Viterra. We're very pleased with how well the teams are working together and our confidence in our ability to hit the ground running on day one has only strengthened as we've moved through the planning process."
Deere & Company (NYSE:DE) posted its Q1 2024 earnings on February 15, reporting an EPS of $6.23 and outperformed the estimates by $1.02. The company's revenue of $10.49 billion beat consensus estimates by $151.62 million. For the full year, the company estimates net income between the range of $7.50 billion to $7.75 billion. The CEO of the company, John May made the following comments at its Q1 2024 earnings call:
"We’ve had a great start to the year. The quarter was strong, and I truly appreciate the efforts of the entire Deere team to deliver these results. As I think about 2024, it’s helpful to consider the smart industrial journey that we’ve been on, which has been grounded in unlocking incremental value for our customers through technology, and enabling Deere to deliver structurally higher financial performance. I’m extremely pleased with how we’ve executed our production systems approach, centralized and advanced our tech stack and focused on delivering value across the entire life cycle of our solutions, all while allocating capital in a more efficient and strategic manner. Deere’s last few years of financial performance are evidence of the structural improvement that comes with executing our strategy, all while delivering better outcomes for our customers."
Trends in the Agriculture and Farmland Industry
According to a June 2023 report by Fitch Solutions, global agriculture faces challenges due to climate change and population growth, which threatens food security. Rising temperatures will affect crop yields, with some regions benefiting while others suffer losses. For example, a one-degree increase in global temperature could lead to a 4.1% to 6.4% decrease in wheat yields. This will increase existing food security issues, especially in vulnerable regions like Sub-Saharan Africa. In addition, due to rising temperatures, regions like Canada and Russia are forecasted to see advantages, as the expansion of arable lands away from the equator might enhance agricultural output in these regions.
Fitch adds that agricultural productivity growth is slowing due to climate change, land degradation, and soil erosion. This poses challenges for global food security, especially in regions with intensive agriculture. The report highlights a decline in average five-year trailing yield growth rates for key crops such as corn, rice, and wheat. During the 1970s and 1980s, these growth rates stood at 2.1%, 1.9%, and 2.2% per annum, respectively. However, by the 2010s, these rates had fallen to 1.4%, 0.9%, and 1.6% per annum, indicating a significant deceleration in agricultural productivity growth.
Finally, the report noted that labor shortages due to aging populations, skill shortages, and restrictive immigration policies drive the industry toward adopting automation and agtech.
Key Players In AgTech
We discussed some of the key players and trends in agriculture technology when we covered the most advanced countries in agriculture technology. It included Arcadia Biosciences Inc. (NASDAQ:RKDA) and Origin Agritech Limited (NASDAQ:SEED). The former is at the forefront of advancing science-based methods to enhance the quality and nutritional content of crops and food ingredients. It applies its exclusive crop innovation technology, ArcaTech?, to drive these advancements. Agritech Limited (NASDAQ:SEED) is a vertically integrated technology firm focusing on agricultural biotechnology. The company specializes in research, development, production, sales, and distribution of crop seeds. It primarily focuses on developing crop enhancements in wheat, aiming to boost farm profitability by enhancing crop performance in the field and their nutritional value as food ingredients. The company received a GMO safety certificate for its transgenic maize, BBL2-2 on May 9.
Some of the bigger players in the agriculture and farmland industry such as Corteva, Inc. (NYSE:CTVA) and Deere & Company (NYSE:DE) are also taking a leading role in the agriculture technology industry. Deere & Company’s (NYSE:DE) precision agriculture segment helps farmers farm more efficiently, lower their costs, and produce higher yields. Corteva, Inc. (NYSE:CTVA) claims that its LumiTreo fungicide seed treatment provides protection against Phytophthora sojae, which will allow a significant increase in yield potential especially for soybeans.
Corteva, Inc. (NYSE:CTVA) is one of the few companies in the agriculture and farming industry that has been outperforming the market so far in 2024. The company's stock is up 19.1% year-to-date on May 9, compared to S&P 500's gains of 10%. The company reported its Q1 2024 earnings on May 1, posting an EPS of $0.89, up $0.06 from analyst estimates. The company generated a revenue of $4.5 billion. Corteva, Inc.'s (NYSE:CTVA) CEO, Chuck Magro made the following comments at its Q1 2024 earnings call:
"Globally, from an industry perspective, we have relatively constructive fundamentals. We continue to see record-setting demand for grain, oilseeds, feed, and biofuels. In order to meet this growing demand, farmers are investing in premium seed and crop protection technologies to enhance and protect yield. Our Seed business is having a very good start to the year. Organic sales are up 5% and price is up 6%, reflecting the value our seed technology consistently delivers to farmers. Our Seed order book reflects strong demand for our product lineup. We are planning to bring about 500 new products to the market this year with approximately 300 new seed hybrids and varieties. Factored into our guidance for the year is the fact that farmers in the U.S. are projected to shift planted area from corn to soybeans, resulting in a projected increase in soybean area of about 3.5%."
While we previously discussed the farmland and agriculture stocks that are favored by institutional investors, some of the best farmland and agriculture stocks to buy according to analysts include Lavoro Limited (NASDAQ:LVRO), Bioceres Crop Solutions Corp. (NASDAQ:BIOX), and Darling Ingredients Inc. (NYSE:DAR). Let's discuss these stocks, among others, in detail below.
11 Best Farmland and Agriculture Stocks To Buy According to Analysts
For this article, we used the Yahoo Finance stock screener to create a list of 30 agriculture and farmland stocks listed on NYSE and NASDAQ with a market capitalization of over $300 million. We narrowed down our list to 11 stocks that were most favored by Wall Street analysts and had the highest average analyst price target upside, as of May 8. The analyst ratings and price targets were taken from TipRanks. The stocks are listed in ascending order of their average analyst price target upside.
Hedge fund sentiment around each stock has also been added. The hedge fund data was taken from Insider Monkey’s database of 933 elite hedge funds as of the fourth quarter of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
11 Best Farmland and Agriculture Stocks To Buy According to Analysts
Corteva, Inc. (NYSE:CTVA) is a chemical and seed company that offers its crop protection products and trait technologies through Seed and Crop Protection segments. In Q4 of 2023, 51 hedge funds held stakes in the stock, with positions worth $1.208 billion. As of the fourth quarter of 2023, Harris Associates is the top investor in the company and has a position worth nearly $431.841 million.
In the last three months, 12 Wall Street analysts have covered Corteva, Inc. (NYSE:CTVA), and 9 maintain a Buy-equivalent rating on the stock. The average price target of $63.33 represents an upside of 10.91%, as of May 8.
Corteva, Inc. (NYSE:CTVA) joins Lavoro Limited (NASDAQ:LVRO), Bioceres Crop Solutions Corp. (NASDAQ:BIOX), and Darling Ingredients Inc. (NYSE:DAR) on our list of the best farmland and agriculture stocks to buy according to analysts.
“Corteva, Inc. (NYSE:CTVA), the seed and crop protection company, was one of the largest contributors. As discussed in last quarter’s commentary, we believed the crop protection business was at or near a cyclical bottom in 2023, as customer destocking followed a 2020-2022 period of robust orders. Share prices have subsequently risen with Corteva’s crop protection sales falling just 5% in the previous quarter, an improved result compared to the 9% full-year decline, accompanied by guidance calling for a return to growth in the second half of 2024. However, as long-term investors, we look past cyclical fluctuations and are encouraged as Corteva further executes on many of the catalysts we identified. These include continued innovation (with over 400 new product launches in 2023) and share gains for the company’s Enlist E3 soybeans, which achieved 58% market penetration in 2023 and became the top-selling soybean technology in the U.S.”
Ingredion Incorporated (NYSE:INGR) is engaged in manufacturing and selling sweeteners, starches, nutrition ingredients, and biomaterial solutions. The company has more than 18,000 customers in over 120 countries. Ingredion Incorporated (NYSE:INGR) was held by 27 hedge funds in the fourth quarter of 2023 and the stakes amounted to $449.156 million. Yacktman Asset Management is the biggest shareholder of the company and has a position worth $240.441 million as of the fourth quarter of 2023.
On May 8, Ingredion Incorporated (NYSE:INGR) reported first-quarter 2024 earnings. The revenue generated during the quarter was $1.88 billion. The non-GAAP EPS was $2.08, which surpassed the market consensus by $0.02.
Ingredion Incorporated (NYSE:INGR) has a consensus rating of Buy as per the 2 Wall Street analysts that have covered it over the past three months. As of May 8, the average price target of $131.67 implies an upside of 11.63% from the present levels.
Bunge Global SA (NYSE:BG) is an agribusiness and food company that produces, purchases, stores, transports, processes, and sells a range of products, including packaged and bulk oils, grains, oilseeds, and more.
In the past three months, Bunge Global SA (NYSE:BG) has received Buy ratings from 5 Wall Street analysts. As of May 8, the average price target of $118.57 has an upside of 12.41% from present levels.
On April 25, Citi analyst Thomas Palmer raised the price target on Bunge Global SA (NYSE:BG) to $122 from $117 and maintained a Buy rating on the shares.
Bunge Global SA (NYSE:BG) was part of 32 hedge funds’ portfolios in Q4 of 2023 with a total stake value of $210.717 million. The company is on our list of the best farmland and agriculture stocks to buy according to analysts.
Nutrien Ltd. (NYSE:NTR) is a provider of crop inputs and related services. The company is engaged in offering a range of agricultural solutions like crop protection products, nutrients, and more through its retail business, Nutrien Ag Solutions. In Q4 of 2023, 39 hedge funds held positions in Nutrien Ltd. (NYSE:NTR) and their stakes amounted to $483.969 million. As of the fourth quarter of 2023, First Eagle Investment Management is the most dominant shareholder in the company and has a position worth $536.312 million.
On May 8, Nutrien Ltd. (NYSE:NTR) reported first-quarter 2024 earnings. The non-GAAP EPS topped the estimates by $0.08 at $0.46. The revenue beat the market estimates by $210 million and was $5.39 billion.
17 Wall Street analysts have covered Nutrien Ltd. (NYSE:NTR), and 13 keep a Buy-equivalent rating on the stock. As of May 8, the average price target of $66.19 implies an upside of 20.18% from present levels.
AGCO Corporation (NYSE:AGCO) manufactures and distributes agricultural equipment and related parts through many brands, including Challenger, Fendt, Gleaner, and Massey Ferguson, among others. 32 hedge funds held stakes in AGCO Corporation (NYSE:AGCO) in the fourth quarter of 2023, with positions worth $415.837 million. With 1.1 million shares of the company, valued at $133.256 million, AQR Capital Management is the largest shareholder of the company as of Q4 of 2023.
AGCO Corporation (NYSE:AGCO) is seventh on our list of the best farmland and agriculture stocks to buy according to analysts. On May 3, Baird lowered the price target on the stock to $139 from $144 but kept an Outperform rating on the shares.
In the last three months, 9 Wall Street analysts have covered AGCO Corporation (NYSE:AGCO), and 5 keep a Buy rating on the stock. The average price target of $138.13 implies an upside of 20.43%, as of May 8.
Alamo Group Inc. (NYSE:ALG) is a Texas-based company involved in designing and manufacturing vegetation management and infrastructure maintenance equipment. The company manufactures and sells agriculture equipment through various brands, including Bush Hog, RhinoAg, and Dixie Chopper, among others.
Based on 3 Wall Street analysts’ ratings over the past three months, Alamo Group Inc. (NYSE:ALG) has a consensus rating of Strong Buy. The average price target of $237.67 represents an upside of 22.75% to the stock’s current price, as of May 8.
On May 2, Alamo Group Inc. (NYSE:ALG) reported first-quarter 2024 earnings. The Q1 GAAP EPS was $2.67, which beat the market estimates by $0.17. The revenue increased by 3.4% year-over-year to $425.6 million and surpassed the consensus by $14.92 million.
In the fourth quarter of 2023, 14 hedge funds had stakes in Alamo Group Inc. (NYSE:ALG) with total positions worth $332.252 million. As of December 31, 2023, Longview Asset Management is the most significant shareholder in the company with a stake worth $286.2 million.
Alamo Group Inc. (NYSE:ALG) has caught the attention of analysts as one of the best farmland and agriculture stocks to buy according to analysts, along with Lavoro Limited (NASDAQ:LVRO), Bioceres Crop Solutions Corp. (NASDAQ:BIOX), and Darling Ingredients Inc. (NYSE:DAR).