Yahoo Finance Is The Mosaic Company (MOS) a Good Farmland and Agriculture Stock to Buy Right Now?
We recently compiled a list of the 10 Best Farmland and Agriculture Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where The Mosaic Company (NYSE:MOS) stands against the other farmland and agriculture stocks.
There is seen to be quick consolidation in the agricultural market of U.S., especially, and the industry is marked by a rapid boom in technological and operating efficiency. Agricultural farms, which have internet access, saw an uptick, as the percentage of such farms grew from 75% in 2017 to 79% in 2022, according to the United States Department of Agriculture. Moreover, a 15% increase in farms was seen that relied on renewable energy-producing systems, whereby, 76% of the total farms in the U.S. were reported using solar energy. Furthermore, supply chain efficiency is also on the rise as the value of direct sales to consumers in 2022 by 116,617 farms rose by 16% to $3.3 billion, as compared to 2017.
As such, the number of farms in the U.S. is falling; there exist 1.89 million farms in 2023, which is a fall of 7%, as compared to 2.04 million farms in 2017. Likewise, the land size has also seen a decrease of 21 million acres of land from 900 million acres in 2017 to 879 million acres in 2023. One of the driving forces for this loss is growing urbanization, which is resulting in the loss of 2,000 acres of farmland every day for residential or commercial purposes, according to the American Farmland Trust. Thus, the industry marked by technological advancements and innovation in animal and crop genetics, equipment, and chemicals means farmers getting out more from less land, meaning a fall in total farms.
After a stellar performance in 2022, wherein the industry recorded $196.4 billion in inflation-adjusted net farm income, it is expected to hit $116.1 billion in the broader sense (not adjusted for inflation) in 2024, which would be a decrease of $39.8 billion, as compared to 2023, a year which also saw a decrease of $29.7 billion relative to 2022. This is seen on the back of rising operating costs, lower animal products receipts, and lower direct government payments in the industry.
On a side note, the industry has also faced challenges due to the Russia-Ukraine war - primarily because both countries are two of the biggest exporters of grain globally, with the level of their exports in 2022 being 11.2 million tons and 21.6 million tons, respectively!
Nevertheless, considering the challenges the agricultural sector is facing right now, we will take you back to what Warren Buffet, one of the most successful investors of all time, said amidst the 2008 financial crisis, “Be fearful when others are greedy, and be greedy when others are fearful.” Thus, on this note, let’s now have a look at the 10 Best Farmland and Agriculture Stocks To Buy According to Hedge Funds.
Methodology
To curate our list of 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds, we referred to the Yahoo Finance stocks screener filtering out around 20 stocks based on the industry and market. From the preliminary list, we then ranked the stocks based on the number of hedge fund holdings, as of 1st quarter of 2024, in an ascending order. With this, let’s now jump to our list of the 10 Best Farmland and Agriculture Stocks to Buy According to Hedge Funds. Also, it’s important to note that all the stock prices quoted anywhere are as of 24th June 2024, unless otherwise stated.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A farmer tending to his crops in a field, with a fertiliser bag nearby.
The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holdings: 38
The Mosaic Company (NYSE:MOS), headquartered in Florida, U.S., runs through its three segments: Phosphates, Potash, and Mosaic Fertilizantes. By doing so, it produces and sells phosphate and potash crop nutrients.
In the 1st quarter of 2024, the company scored sales of 2.2 million tons for its potash segment, translating it into an EBITDA of $281 million. On the other hand, the phosphates segment was able to bag a sales volume of 1.6 million tons, reflecting an adjusted EBITDA of $277 million.
Currently, 28 hedge funds have invested in The Mosaic Company (NYSE:MOS), with investments totaling $579.2 million. The biggest chunk of these investments belongs to D E Shaw, who holds a value of $111 million!
5 out of 6 analysts have held on to the stock for the last 3 months, with the price target of the stock being set at $35.4, as compared to its current price of $27.8, which would translate into an upside potential of a whopping 27.3%!
This is what President and the CEO, Bruce Bodine spoke about the company’s outlook, as of 2024 first quarter:
“First, the transaction we announced with Ma'aden highlights our commitment to unlocking shareholder value. Exchanging our 25% stake in the MWSPC joint venture for an approximately $1.5 billion position in Ma'aden provides a clear indication of value and greater capital flexibility in the future; second, we are making good progress on several high-return, low-capital intensity initiatives that will improve results across the commodity cycle; and third, fertilizer market fundamentals remain constructive and the phosphate supply and demand picture is particularly compelling.
As the North America spring planting season winds down and fertilizer prices have moderated, fertilizer demand strength is now emerging in other key agricultural geographies, which will bode well for pricing in the second half of the year.
We have several other ongoing initiatives to drive improved returns. Our $150 million cost reduction plan is on track and delivering early results. Potash production cash cost per tonne declined about $10 in the first quarter compared with the same period in the prior year. We are rightsizing our workforce and have identified opportunities to reduce our third-party contractors over the next 18 months, which will result in $20 million to $30 million in annual cost savings when complete. We are making progress on our SG&A expense management. With our first quarter SG&A expenses down by $21 million or 16% compared with a year ago.”
Overall MOS ranks 4th on our list of the best farmland and agriculture stocks to buy. You can visit 10 Best Farmland and Agriculture Stocks To Buy According to Hedge Funds to see the other farmland and agriculture stocks that are on hedge funds’ radar. While we acknowledge the potential of MOS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MOS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.
