With the global population soaring and dietary preferences evolving, the agricultural sector faces increasing demand for diverse, higher-value products. So, quality agriculture stocks Archer-Daniels-Midland Company (ADM), Bunge Global SA (BG), and Dole plc (DOLE), with the profit potential, could be solid buys this month. Moreover, these companies also pay stable dividends.
As the global population skyrockets, the pressure on the agricultural sector intensifies to keep pace with the rising food requirements. Additionally, changing dietary patterns, urbanization, and economic development contribute to the escalating demand for diverse and higher-value agricultural products.
Moreover, there is a growing consumer preference for organic and locally sourced food products in the United States, driving increased demand for organic farming and fostering the growth of small-scale farmers. The rising popularity of plant-based diets has further fueled demand for plant-based protein sources like soybeans.
The agricultural sector is adapting to address this growing demand by incorporating technological advancements, sustainable farming practices, and crop and livestock management innovations. The gross production value in the U.S. agriculture market is projected to amount to $298.30 billion this year.
Additionally, the global agriculture market is expected to grow at a CAGR of 9.1% to reach $19 trillion by 2027.
Furthermore, the global agrifood industry has exhibited a robust growth trajectory, propelled by the integration of e-commerce and digital technologies, facilitating direct-to-consumer sales, traceability, and efficiency in the supply chain, transforming the agri-food industry. The market is expected to hit $9.73 trillion this year. Looking ahead, the market is likely to expand at a CAGR of +6%, reaching $12 trillion by 2027.
In light of these encouraging trends, let's look at the fundamentals of the three best Agriculture stocks, beginning with number 3.
Stock #3: Archer-Daniels-Midland Company (ADM)
ADM procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients in the United States, Switzerland, the Cayman Islands, Brazil, Mexico, Canada, the United Kingdom, and internationally. The company operates in three segments: Ag Services and Oilseeds; Carbohydrate Solutions; and Nutrition.
On November 14, ADM and Marathon Petroleum Corporation (MPC) celebrated the opening of their joint venture soybean processing facility, Green Bison Soy Processing, in Spiritwood, North Dakota.
As the state's first dedicated soybean processing complex, Green Bison will contribute to meeting the rising demand for renewable fuels, specifically renewable green diesel. The facility, valued at approximately $350 million, boasts advanced automation technology and can process 150,000 bushels of soybeans daily.
In November, ADM declared a cash dividend of $0.45 per share on its common stock, payable to shareholders on December 6, 2023. It pays $1.80 annually as dividends, which translates to a yield of 2.44% on the prevailing price level. The company has raised its dividend payouts consistently for the past 30 years.
ADM’s revenues for the fiscal third quarter ended September 30, 2023, came in at $21.70 billion. The company’s gross profit came in at $1.81 billion. Its adjusted net earnings for the period came in at $880 million, while adjusted EPS came in at $1.63.
Analysts expect ADM’s revenue and EPS to come in at $24.67 billion and $1.66 for the fiscal fourth quarter (ending December 2023). The company has exceeded the analysts’ EPS estimates in each of the trailing four quarters, which is remarkable.
Over the past month, the stock has gained 2.4% to close the last trading session at $73.75.
ADM’s POWR Ratings reflect this solid outlook. The stock has an overall rating of B, translating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Sentiment and Quality. It is ranked #7 out of 26 stocks in the Agriculture industry.
To access ADM’s Growth, Value, Momentum, and Stability ratings, click here.
Stock #2: Bunge Global SA (BG)
BG is a global agribusiness and food company with operations in various sectors. It offers agricultural commodity products, oils, fats, sugar, ethanol, and corn milling products, organized into four segments: Agribusiness; Refined and Specialty Oils; Milling; and Sugar and Bioenergy.
On November 15, BG and Musim Mas Group announced a collaboration to promote sustainable practices among smallholder farmers in Sambas, West Kalimantan, Indonesia. Co-funded through 2025, the partnership aims to train over 1,000 independent smallholders in the sustainable production of palm oil.
On November 1, BG declared a cash dividend of $0.6625 per common share. The dividend will be paid from the company’s capital contribution reserves and payable on March 1, 2024. The company pays an annual dividend of $2.65, that translates to a yield of 2.54% on the prevailing price level.
In the fiscal third quarter that ended on September 30, 2023, BG’s gross profit increased 17.7% year-over-year to $1.05 billion. Its total segment EBIT grew 2.8% from the year-ago value to $584 million. Its net income increased 1.6% from the prior-year quarter to $389 million.
BG’s revenue and EPS are expected to be $15.36 billion and $2.84 for the fiscal fourth quarter (ending December 2023).
The stock has gained 14.6% over the past six months and 8.5% over the past year to close the last trading session at $104.50.
BG’s robust prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
It also has an A grade for Growth and a B for Value. In the same industry, it is ranked #4.
In addition to the POWR Ratings highlighted above, one can access BG’s Momentum, Stability, Sentiment, and Quality ratings here.
Stock #1: Dole plc (DOLE)
DOLE, headquartered in Dublin, Ireland, engages in sourcing, processing, marketing, and distributing fresh fruit and vegetables. The company operates through four segments: Fresh Fruit; Diversified Fresh Produce – EMEA; Diversified Fresh Produce – Americas and ROW; and Fresh Vegetables.
On November 16, DOLE declared a cash dividend for the third quarter of 2023 of $0.08 per share, payable on January 4, 2024. The company distributes an annual dividend of $0.32, translating to a yield of 0.32% on the current market price.
During the fiscal third quarter that ended September 30, 2023, DOLE’s revenue increased 4.2% year-over-year to $2.04 billion. The company’s net income grew 15.9% from the prior-year quarter to $54 million. Moreover, its adjusted EBITDA increased 7.6% from the prior-year quarter to $85.20 million.
Street expects DOLE’s EPS and revenue for the first quarter of fiscal 2024 (ending March 2024) to increase 13% and 6.9% year-over-year to $0.38 and $2.11 billion, respectively. Also, the company has an impressive surprise earnings history, surpassing consensus EPS estimates in each of the trailing four quarters.
The stock has soared 13.7% over the past year to close the last trading session at $11.84. It has also gained 22.7% year-to-date.
DOLE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth. In the same industry, it is ranked first.
Click here to see the additional ratings for DOLE (Growth, Momentum, Stability, Sentiment, and Quality).
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
ADM shares were trading at $74.24 per share on Monday morning, up $0.49 (+0.66%). Year-to-date, ADM has declined -18.19%, versus a 21.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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