When you stop to think about just how important food production is for the civilized world, it’s easy to recognize the value in agriculture stocks. These are companies that provide agricultural products and services such as fertilizers, livestock, pesticides, and more. With that said, many investors overlook stocks in the agriculture industry entirely as they aren’t as exciting as some of the high-flying growth names that dominate market headlines these days. That conception might be changing soon, as many stocks in the agriculture industry have been off to a strong start in 2021.
These stocks offer investors stability thanks to consistent long-term demand for their products. Many of them return cash to shareholders in the form of dividends as well. Most agriculture companies are mature, generate steady cash flows, and trade with less volatility, which means that they can offer nice buying opportunities for all types of investors. Let’s take a look at 3 agriculture stocks to consider buying in 2021.
Corteva Inc (NYSE:CTVA)
First, we have Corteva Inc, a company that was formed back in 2019 following its separation from DowDuPont. It is the biggest pure-play agricultural organization in the world and operates in two main business segments. The seed segment helps farmers to produce the maximum yield for farms around the world, including crops like corn and soybeans in North America. Corteva’s crop protection segment helps to protect the global agriculture input industry with products that defend crops against issues like weeds, insects, pests, and disease.
As the world’s population continues to increase, farmers will be facing big challenges as they try to produce enough food for the world. That means figuring out ways to maximize their crops on limited land while adhering to new rules and regulations. A company like Corteva can help farmers to make the most out of their limited resources, keep their harvests safe, and grow their biggest possible yields. Corteva reported decent Q3 results that saw the company improve EBITDA by 14% year-over-year, and the company has a strong pipeline of patented crop protection chemicals that could drive growth. The stock is up 15% year-to-date in 2021 and also offers a 1.17% dividend yield.
Scotts Miracle-Gro (NYSE:SMG)
Another strong agriculture stock to consider buying in 2021 is Scotts Miracle Grow, a leading manufacturer of branded consumer lawn and garden products in North America. If you have ever been interested in landscaping or dealt with lawn issues before on your property, the chances are good that you used this company’s products. Scotts owns several successful brands, including Scotts, Miracle-Gro, Turf Builder, and more. It sells things like lawn fertilizer products, grass seed products, weed and pest control products, and gardening products.
There are two strong reasons why Scotts Miracle-Gro stock is worth buying at this time. First, you have the work-from-home trend that should continue to drive an uptick in landscaping and lawn care investments. Just look at the 2020 earnings for Lowe’s, Home Depot, and Walmart for confirmation, which happens to be the company’s three largest customers. There’s also the fact that Scott’s has a hydroponic gardening business segment called The Hawthorne that could benefit greatly from changes to the U.S. marijuana laws under the Biden administration. Scotts stock is up roughly 12% year-to-date and offers a current dividend yield of 1.1%.
Tyson Foods Inc (NYSE:TSN)
The last company on our list is one of the world’s largest suppliers of meat in the world, Tyson Foods Inc. The company sells its products to over 140 different countries around the world, including meats like chicken, beef, and pork. Tyson Foods has dealt with some serious issues related to the pandemic including supply chain problems and weak restaurant sales, which means investors can view it as a recovery play. The stock price has not recovered to its pre-pandemic highs, so investors that are interested in adding a strong defensive stock at a bargain should be interested.
In the near term, we can expect sales from the company’s foodservice channel to recover as more people begin heading out to restaurants and hotels. Tyson will also benefit from increasing global demand for protein as the world’s population continues to expand, particularly in emerging markets. In Q4, Tyson reported a 5.3% year-over-year increase in sales as well as a 68.6% year-over-year increase in Net Income. With a 2.78% dividend yield and steady demand for Tyson’s products in retail locations like grocery stores, this is a nice agricultural stock for value investors to consider at this time.
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