Demand for foods is growing faster than supply can keep up with, likely due to the increase in demand from China and use of agricultural resources for biofuel production. Players in the industry are responding to the phenomenon by positioning themselves to become major suppliers to the consuming giant, according to Value Stock Guide.
Agriculture could end up being one of the lead investments for the next few years at least, if the companies take advantage of the price inflation correctly. For instance, nitrogen based fertilizer companies are able to take advantage of the slump in natural gas prices, which makes their production costs lower.
Business Section: Investing Ideas
Since the demand is growing faster than supply, the likelihood is that prices will be driven up. Issues have risen in the past in response to food shortages, like riots in 2007 and 2008, but companies still were able to benefit from the increase in prices. If anything, global press about the food shortage issues should serve as a catalyst for price.
Below is a list of stocks that could benefit from the increase in demand of agricultural products around the world. Do you think they are well position themselves to take advantage of the trend?
List sorted by market cap.
Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:
1. E. I. du Pont de Nemours and Company (DD, Earnings, Analysts, Financials): Diversified business that is exposed to the agriculture industry Market cap at $46.43B, most recent closing price at $49.55.
2. Monsanto Co. (MON, Earnings, Analysts, Financials): Provides agricultural products for farmers in the United States and internationally. Market cap at $42.81B, most recent closing price at $80.25.
3. Deere & Company (DE, Earnings, Analysts, Financials): Provides products and services primarily for agriculture and forestry worldwide. Market cap at $31.12B, most recent closing price at $74.71.
4. Archer Daniels Midland Company (ADM, Earnings, Analysts, Financials): Procures, transports, stores, processes, and merchandises agricultural commodities and products in the United States and internationally. Market cap at $19.19B, most recent closing price at $29.26.
5. CF Industries Holdings, Inc. (CF, Earnings, Analysts, Financials): Through its subsidiary, CF Industries, Inc., manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. Market cap at $12.47B, most recent closing price at $163.81.
6. Bunge Limited (BG, Earnings, Analysts, Financials): Engages in the agriculture and food businesses worldwide. Market cap at $8.94B, most recent closing price at $58.39.
7. AGCO Corporation (AGCO, Earnings, Analysts, Financials): Distributes agricultural equipment and related replacement parts worldwide. Market cap at $4.21B, most recent closing price at $40.94.
8. Terra Nitrogen Company, L.P. (TNH, Earnings, Analysts, Financials): Produces and distributes nitrogen fertilizer products to agricultural and industrial customers. Market cap at $4.04B, most recent closing price at $194.97.
9. Rentech Nitrogen Partners, L.P. (RNF, Earnings, Analysts, Financials): Nitrogen based fertilizer producer. Market cap at $1.05M, most recent closing price at $23.75.
(Written by Danny Guttridge)
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Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
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Dig Deeper: Access Company Snapshots, Charts, Filings
- E. I. du Pont de Nemours and Company (DD, Chart, Download SEC Filings)
- Monsanto Co. (MON, Chart, Download SEC Filings)
- Deere & Company (DE, Chart, Download SEC Filings)
- Archer Daniels Midland Company (ADM, Chart, Download SEC Filings)
- CF Industries Holdings, Inc. (CF, Chart, Download SEC Filings)
- Bunge Limited (BG, Chart, Download SEC Filings)
- AGCO Corporation (AGCO, Chart, Download SEC Filings)
- Terra Nitrogen Company, L.P. (TNH, Chart, Download SEC Filings)
- Rentech Nitrogen Partners, L.P. (RNF, Chart, Download SEC Filings)
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