7 Agriculture Stocks That Can Ride Out Market Volatility
With myriad chokepoints weighing on food-related commodities, agriculture stocks to buy may rise in demand. Fundamentally, the needs associated with the agricultural industry largely benefit from inelasticity. That is, no matter what’s going on with the economy, civilizations need access to sustenance.
Specifically, one of the biggest (albeit cynical) catalysts for agriculture stocks to buy centers on Russia’s invasion of Ukraine. Since both nations represent major producers of wheat, grain production will likely be reduced significantly. Unfortunately, that’s not the only factor to consider. Even Mother Nature seems upset these days.
With damaging winter wheat crop prospects impacting areas from Argentina to southern Europe and from the U.S. to North Africa, the supply of core goods will probably be strained. Again, it’s not a holistically uplifting narrative. However, the wildness of the events associated with the new normal may keep these agriculture stocks running for a while.
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Based in Bloomington, Minnesota, Toro (NYSE:TTC) designs, manufactures, and markets lawnmowers, snow blowers, and irrigation system supplies for commercial and residential, agricultural, and public sector use. Presently, the company commands a market capitalization of $11.6 billion. Since the start of the year, TTC slipped by 2%. However, in the trailing year, shares gained over 14%.
Financially, Toro’s greatest strengths lie in its operational attributes. For example, its three-year revenue growth rate stands at 13.8%, outpacing over 77% of the competition. On the bottom line, the company features a net margin of 9.82%, above 72.54% of the industry.
To be fair, it’s not that much of a source of passive income, carrying a forward yield of only 1.23%. However, Toro’s payout ratio stands at 24.65%, making it very sustainable. As well, the company is on a 19-year streak for consecutive annual dividend increases. Interestingly, Wall Street analysts peg TTC as a consensus moderate buy. Also, their average price target stands at $123, implying 11% upside potential. Therefore, it’s a solid idea for agriculture stocks to buy.
FMC Corp (FMC)
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Headquartered in Philadelphia, Pennsylvania, FMC Corp (NYSE:FMC) is an agricultural sciences company that advances farming through innovative and sustainable crop protection technologies, per its website. At the moment, FMC carries a market cap of $16 billion. Since the January opener, FMC gained over 2%. And in the trailing year, it’s up over 7%.
As with Toro above, FMC’s greatest strengths lie in its operations. In particular, its three-year book growth rate stands at 11.2%, outpacing 62.56% of its peers. On the bottom line, the company features a net margin of 12.69%, above 72.81% of the underlying sector. For dividend lovers, FMC rates a tad bit more generous than Toro, though not by much. Its forward yield sits at 1.81%. However, the company’s payout ratio pings at just under 26%, indicating a sustainable yield.
Turning to Wall Street, covering analysts peg FMC as a consensus strong buy. As well, their average price target stands at $144.30, implying nearly 13% upside potential. Again, it makes for a solid idea for agriculture stocks to buy.
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A manufacturer of agricultural equipment, Deere (NYSE:DE) is an indirect play among agriculture stocks to buy. However, as demand in the space picks up, Deere could be a natural beneficiary. Presently, the company commands a market cap of $124.38 billion. Since the January opener, DE slipped by 1%. However, in the trailing year, shares gained nearly 12% of equity value.
As with other agriculture stocks to buy, Deere rates best in the operational department. However, it does make for objectively solid value. Presently, DE’s price-earnings-growth (PEG) ratio sits at 0.97 times, below the sector median PEG of 1.19. For operations, the company features a three-year revenue growth rate of 11.7%, outrunning 78% of the field. In terms of net margin, it posted 14.9%, blowing past nearly 92% of its rivals. Looking to the Street, covering analysts peg DE as a consensus moderate buy. As well, their average price target stands at $473.53, implying nearly 13% upside potential.
Headquartered in Maumee, Ohio, Andersons (NASDAQ:ANDE) is a diversified organization conducting business in the commodity merchandising, renewables, and plant nutrient sectors. Currently, the enterprise features a market cap of $1.54 billion. Since the Jan. opener, ANDE gained almost 36% of its equity value. In the past 365 days, though, it slipped nearly 4%.
A good chunk of its resurgence centers on the company’s strong fourth-quarter earnings report. As well, the company delivers a set of intriguing valuation metrics. First up, the market prices ANDE at a trailing multiple of 12.12. As a discount to earnings, Andersons ranks better than 68.53% of its peers. Moreover, ANDE trades at a trailing sales multiple of 0.09. This stat ranks better than 92% of the industry.
Similar to other direct agriculture stocks to buy, Andersons doesn’t deliver much in the way of passive income. Its forward yield sits at 1.61%. However, just like the others, its payout ratio is 21.45%, indicating sustainability. Also, the company features 25 years of consecutive dividend increases. Lastly, covering analysts peg ANDE as a consensus moderate buy. Further, their average price target stands at $52.50, implying 14% upside potential.
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A Canadian fertilizer company, Nutrien (NYSE:NTR) is the largest producer of potash and the third-largest producer of nitrogen fertilizer in the world, per its public profile. Naturally, these stats afford the enterprise incredible relevancy. Currently, Nutrien carries a market cap of 53.36 billion CAD (about $39.18 billion). Since the January opener, NTR gained almost 10% of its equity value.
Still, in the trailing year, NTR dropped almost 11%, possibly making it undervalued. Indeed, the market prices NTR at a trailing multiple of 5.58. As a discount to earnings, Nutrien ranks better than 81.72% of the competition. Also, its PEG ratio sits at 0.11 times, lower than over 96% of sector players. One notable feature of NTR compared to other agriculture stocks to buy focuses on passive income. Nutrien carries a forward yield of 2.7, very close to the sector average of 2.82%. And just like the other enterprises, Nutrien features a low payout ratio of 25.27%.
Finally, covering analysts peg NTR as a consensus moderate buy. Moreover, their average price target stands at $91.36, implying over 16% upside potential.
CF Industries (CF)
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Based in Deerfield, Illinois, CF Industries (NYSE:CF) is a manufacturer and distributor of agricultural fertilizers, including ammonia, urea, and ammonium nitrate products. Currently, the company commands a market cap of $16.67 billion. Since the January opener, CF gained nearly 4% of its equity value. In the past 365 days, CF moved up a modest half a percent.
Immediately, bargain hunters of agriculture stocks to buy may notice the value proposition. Presently, the market prices CF at a trailing multiple of 5.22. As a discount to earnings, CF ranks better than 84.95% of the competition. Further, CF trades at a forward multiple of 6.99, lower than 61.9% of the field.
As for the passive income department, it could use some work. CF carries a forward yield of 1.88%; it’s not great but not terrible either. Plus, the company features an ultra-low payout ratio of 18.71%. Turning to Wall Street, covering analysts peg CF as a consensus moderate buy. Further, their average price target stands at $104.43, implying over 19% upside potential. Thus, it could be a growth opportunity among agriculture stocks to buy.
An agribusiness and food company, Bunge (NYSE:BG) focuses on the international soybean export industry. As well, it’s involved in food processing, grain trading, and fertilizer. Presently, the company carries a market cap of $14.27 billion. Since the Jan. opener, BG dipped almost half a percent. In the trailing year, shares gave up nearly 12% of equity value.
Again, bargain hunters will appreciate the value proposition that Bunge brings to the table. Right now, the market prices BG at a trailing multiple of 9.05. As a discount to earnings, Bunge ranks better than 76.36% of the competition. Further, BG trades hands at 8.04-times forward earnings, which sits well south of the industry median of 16.97 times. Aside from the discount, Bunge provides some decent passive income with a forward yield of 2.63%. As well, the company’s payout ratio sits at 22.1%, indicating a sustainable yield.
Lastly, Wall Street analysts peg BG as a consensus strong buy. Moreover, their average price target stands at $123, implying over 29% upside potential. Thus, it’s a compelling example of agriculture stocks to buy.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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