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Tickers in this Article: MON, DE, CAT, BG
For the past 30 or so years, our economy has suffered recessions, expansion, and everything in between. The financial sector expanded and exploded, the internet stocks saw a great bubble and real estate saw tremendous growth before coming back down to reality. It's been a different story for agriculture.

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The Agricultural Reality
Despite the growth in all of the above industries, the agricultural industry has not been a beneficiary of any significant infrastructure investment. At the same time, the long-term problem of feeding the world has not gone away; in fact it continues to become a more and more significant issue as populations grow and people become more urbanized. As people develop a higher standard of living, their desire to eat a wider variety of foods increases. Sooner or later, the agricultural sector is going to need significant amounts of additional investment to address this problem and create a great opportunity for agriculture stocks in 2010 and beyond. (For more, see Guard Your Portfolio With Defensive Stocks.)

Stick with Dominance
One of the most favored companies to benefit from long-term fundamental outlook for agriculture is Monsanto (NYSE:MON), the $45 billion giant in the space. Monsanto is the industry leader in fruit and vegetable seed production. It focuses on creating genetically modified seeds that enable farmers to grow stronger, higher yielding, and more disease-resistant plants. While the genetic modification of seeds has its drawbacks, which should be taken seriously, the company's seeds help produce more food per acre of arable land. Producing more food with less resources is the only way to address the problem, and creating genetically modified seeds (for better or worse) is getting a lot of support. Smaller competitor Bunge (NYSE:BG) may not be as dominant as Monsanto, but it does trade at much more attractive valuations and will likely benefit from any favorable upward move in agriculture stocks. (For more, see 22 Ways To Fight Rising Food Prices.)

Planting and harvesting crops requires machinery, and no company dominates that area more than Deere (NYSE:DE), the giant agricultural equipment company. Deere's green and yellow tractors, seeding machines and harvesters are well known throughout the world, and enjoy a franchise-like dominance. Despite the recession, Deere managed to earn nearly a billion dollars in profit. As the situation improves, Deere will be earning greater profitability. The stock price of $56 commands a P/E of 27 but a forward P/E of 15 based on improved outlooks. That's a much more attractive multiple than fellow large cap competitor Caterpillar (NYSE:CAT).

The Bottom Line
Feeding the world will always be a vital issue, and has been ignored for far too long. Now with the world awakening to the problem, the outlook for the industry is very favorable, going forward.

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