#stock #agriculture #investing #agricultural stocks
The agriculture industry is one of the most influential sectors in the global economy, and is able to recover very quickly from downturns in crises. Agriculture provides raw materials for many industries and is a major producer of food. And despite the industry’s coming innovations, it will still retain all of its functions.
The demand for fertilisers and wheat is currently only increasing due to a supply shortage caused by the war in Ukraine.
There are plenty of opportunities for those wishing to invest in this sector. The agricultural business is made up of many branches of industry and employs over a billion people. Revenues of the big agricultural companies amount to 115 billion dollars a year.
New technology developments will give rise to new divisions in the sector: Smart Farming, which is forecast to grow by $2.88 billion, Automated Pest Control and Artificial Intelligence in Agriculture are forecast to grow by $458 million and $100 million respectively.
The agriculture sectors of interest to the investor are fertiliser, livestock, plant-based meat, feed, vertical farming and digital agriculture.
There are 3 companies that could be considered for long term investment.
Nutrien Company (NYSE: NTR)
Nutrien, a major producer of nitrogen fertilizers and a major producer of potassium. Demand for nitrogen fertilizers has increased sharply since 2021 on the back of higher raw material prices, and with the war in Ukraine, demand for nitrogen fertilizers has increased even more as both countries are major fertilizer suppliers. Nutrien has the advantage of low nitrogen production costs for fertilizers. Last year, the company had revenues before interest, taxes, depreciation and amortization of $7.1bn and is expected to make $14.5bn by the end of 2022. Sales in nitrogen were up 55%, potash was up 55% and phosphate had a 41% year-on-year increase.
The company has a market capitalization of $40.9 billion.
Archer-Daniels-Midland (NYSE: ADM)
Archer-Daniels-Midland is a major food processor, engaged in the harvesting, cleaning, storage and transportation of grains and oilseeds. The company’s activities also include import, export and sale of fodder and agricultural commodities.
The company had Q2 revenues of $27.3 billion. Net and adjusted earnings were $1.2 billion. Earnings per share were $2.18.
The stock gained 27% over the year.
The company has a market capitalization of $48.07 billion.
Local Bounti ( NYSE: LOCL)
A vertical farming and hydroponics company. This is a relatively new technology that is actively growing. The idea behind the technology is that it makes minimal use of land and water by using shelves and artificial light to grow crops. Much less space is needed to grow food, and it allows vertical farms to be as close as possible to the consumer.
Local Bounti is set to open four new units next year, already with major investors including Cargill.
Bottom Line
The farming business has been and remains a promising area and is growing rapidly. Shares in agricultural companies, although experiencing falls during crises, are still able to recover impressively. The innovations being actively implemented in this sector are causing further growth in the industry. For example, digital farming research will help to optimize farming as much as possible by processing data, optimizing processes and making predictions about every farm.
John Deere, for example, has succeeded in becoming a digital leader.
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