In this article, we discuss the 11 best organic food and farming stocks to buy. To skip the detailed analysis of the agriculture industry and organic food and farming segment, go directly to the 5 Best Organic Food and Farming Stocks To Buy.
Agriculture Industry Analysis
The agriculture industry has faced quite a lot of volatility since the Russia-Ukraine war. Ukraine is one of the biggest food exporters in the world. The country’s exports declined sharply in the first few months of the war and resumed once the Black Sea Grain Initiative was signed. The agreement was signed between Russia, Ukraine, Turkey, and the United Nations in July 2022 which allowed cargo trips to travel from Ukrainian ports at the Black Sea. Despite the deal, there have been several disruptions along the way. Even before the agreement expired in July, the pace remained below pre-invasion levels, according to a United States Department of Agriculture (USDA) report.
The latest Israel-Hamas conflict could also shake the food prices and make them more volatile as Israel is a significant potash fertilizer exporter, which could put 3% of the global potash supply at risk, according to Scotiabank. Additionally, according to Chief Strategist at BCA Research, Robert Ryan, Iran’s ties to Hamas and Hezbollah can lead the US to tighten the sanctions on the country. It could disrupt the oil supply significantly after Russia and OPEC made voluntary cuts to oil production this year. If it happens, the surge in oil prices can have drastic effects on the global economy.
Organic Food and Farming Outlook and Comparison
Due to the world moving toward sustainable practices, especially when it comes to food and farming, organic foods have started to become more and more popular. According to USDA, between 2010 and 2021, certified organic cropland acres increased by 79 percent and certified farms increased by 90%. The US organic food products sales were around $26.9 billion in 2010 (inflation-adjusted to 2021 dollars) and almost doubled to $52.0 billion in 2021. The Organic Trade Association reported that in 2022, organic food sales crossed the $60 billion mark for the first time, while the total organic sales including non-food products reached a record $67.6 billion. Certified organic food sales accounted for 6% of the total food sales in the US in 2022, compared to 4% in 2020. Organic Trade Association CEO, Tom Chapman said:
“Organic has proven it can withstand short-term economic storms. Despite the fluctuation of any given moment, Americans are still investing in their personal health, and, with increasing interest, in the environment; organic is the answer.”
According to the Business Research Company, the global food and beverages market is expected to grow at a compound annual growth rate (CAGR) of 6.3% between 2023 and 2027. On the other hand, the organic food and beverages market is expected to grow at a CAGR of 13.9% between the same period and between 2027 and 2032, it is expected to grow at a CAGR of 16.7%.
Some hurdles that the organic food and farming market faces include the low shelf life of organic foods because no preservatives are used in them. Moreover, organic foods sell at a premium due to their limited supply and higher production costs. Last year’s inflation affected organic food costs more than conventional food costs. Between January 2022 and 2023, the organic fruits and vegetables costs were up 13.1%, compared to 9.9% for conventional fruits and vegetables. In addition, organic chicken costs increased by 19.5% during the same period, compared to a 5.9% increase in conventional chicken costs.
Despite these problems, the organic food market is growing remarkably, and organic food and farming stocks could see significant growth in the future. Some of the best organic food and farming stocks include General Mills, Inc. (NYSE:GIS), Corteva, Inc. (NYSE:CTVA), and The Kroger Co. (NYSE:KR).
Best Organic Food and Farming Stocks To Buy
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Our Methodology
To compile this list of organic food and farming stocks, we chose the companies according to the hedge fund sentiment of each stock which was taken from Insider Monkey’s database of 910 elite hedge funds. Moreover, we made sure that these companies have either a low price-to-earnings ratio, healthy earnings growth, or shareholder returns.
Herbalife Ltd. (NYSE:HLF) is a California-based corporation that produces and sells dietary supplements. The company is one of the best organic food and farming stocks to buy as its HERBALIFE V line contains products that are organic certified.
In Q2, 28 out of 910 hedge funds tracked by Insider Monkey held a stake in Herbalife Ltd. (NYSE:HLF) stock, compared to 27 in Q1. San Francisco-based Route One Investment Company was the most significant shareholder of Herbalife Ltd. (NYSE:HLF) with 10.8 million shares worth $143.598 million.
Herbalife Ltd. (NYSE:HLF) is a noteworthy stock along with General Mills, Inc. (NYSE:GIS), Corteva, Inc. (NYSE:CTVA), and The Kroger Co. (NYSE:KR).
AGCO Corporation (NYSE:AGCO) is a Georgia-based company in the agricultural industry that manufactures and sells equipment and parts for agriculture. The company distributes its products under Challenger, GSI, Massey Ferguson, Fendt, and Valtra brands. The company’s AGCO Finance manages a €50 million Climate Journey Fund that offers financing options to farming businesses that are aspiring to go for organic produce, get involved in net zero value chains, or enter the market space through sustainable certification.
On October 26, AGCO Corporation (NYSE:AGCO) declared a quarterly dividend of $0.29 per share. It is payable by December 15 to the shareholders of record on November 15.
Nutrien Ltd. (NYSE:NTR) is a Canadian fertilizer company. According to the California Certified Organic Farmers, the retail division of the company, Nutrien Ag Solutions, provides products and services to the organic growers in California through over 30 facilities.
Nutrien Ltd. (NYSE:NTR) is on our list of best organic food and farming stocks to buy due to its healthy dividend yield and payout ratio, low valuation due to a decline in its stock price in the last twelve months, and the bullish sentiment of billionaire hedge fund holders.
FMC Corporation (NYSE:FMC) is a Pennsylvania-based chemical manufacturing company. Some of the company’s products that can be used in organic farming are its biopesticides, biofertilizers, and pheromones for pest control.
On October 16, Vertical Research’s analyst Kevin McCarthy upgraded FMC Corporation (NYSE:FMC)’s stock to Buy from Hold with a $94 price target. Even though he says that he remains cautious for the rest of the current year, he sees a stabilization of market conditions in 2024.
FMC Corporation (NYSE:FMC) is a high dividend yield stock that has been beaten down over the past year, trading at a PE ratio of 9.91. Its dividend yield of 4.08% as of October 29 and low valuation make FMC Corporation (NYSE:FMC) one of the best organic food and farming stocks to buy.
Archer-Daniels-Midland Company (NYSE:ADM) is a USDA organic certification holding firm that is engaged in dealing with raw agricultural materials from origination to storage. The company also produces and markets nutrition products, including but not limited to, its iconic organic flours, soybeans, plant-based proteins, corn, prebiotics, and enzymes.
On October 24, Archer-Daniels-Midland Company (NYSE:ADM) reported a non-GAAP EPS of $1.63 which exceeded the estimates by $0.09 and $21.7 billion in revenue for its Q3.
Performance Food Group Company (NYSE:PFGC) is an American company that sells food and food-related products. The company operates through three divisions; Performance Foodservice, Vistar, and PFG Customized. Performance Food Group Company (NYSE:PFGC)’s Vistar “Good to Go” Program has more than 1800 organic, vegan, non-GMO, and gluten-free products.
For FY 23, Performance Food Group Company (NYSE:PFGC) was able to generate $57.3 billion in revenue, up 12.5% from the previous year. The company’s net income increased over 250% YoY to around $397.2 million.
Performance Food Group Company (NYSE:PFGC) is expected to report its Q1 2024 earnings on November 8. The company management is expecting its net sales to be between $14.7 billion to $15 billion, compared to the market estimates of $15.22 billion. For the full year, Performance Food Group Company (NYSE:PFGC) expects its net sales to be in the range of $59 billion to $60 billion.
General Mills, Inc. (NYSE:GIS), Corteva, Inc. (NYSE:CTVA), and The Kroger Co. (NYSE:KR) are some of the best organic food and farming stocks along with Performance Food Group Company (NYSE:PFGC).
