Investors interested in exposure to the wheat market most commonly trade wheat futures. Wheat is one of the most actively traded agricultural commodities at the Chicago Board of Trade (CBOT). There are no publicly traded stock companies that represent a pure play in wheat. Stock traders can choose from major agribusiness firms such as Archer Daniels Midland Company (NYSE: ADM) or fertilizer suppliers such as The Mosaic Company (NYSE: MOS). Here are the three best wheat stocks to own for 2019.
Archer Daniels Midland Company
Founded in 1898, the Archer Daniels Midland Company is a multinational agribusiness firm engaged in production and marketing of agricultural commodities. ADM has more than 600 crop procurement and processing facilities worldwide. The company is also involved in transportation, trade financing, and insurance. Its size, global base, and diverse product portfolio provide a substantial competitive edge to the company. ADM continues expansion in emerging market economies. Completing its fourth feed plant in China last year.
ADM stock, trading just over $50 a share in Sept. 2018, was up 25.4% year-to-date (YTD). The company’s market capitalization is $28.14 billion. The stock offers a better-than-market average dividend yield of 2.67%. Two impressive financial metrics are a price-to-book (P/B) ratio of 1.5 and debt-to-equity ratio of 0.41. The company has managed to grow earnings by an average annual rate of 12.2% over the last five years.
Bunge Ltd. (NYSE: BG) operates globally as a food and agribusiness firm through five principal business segments: agribusiness, sugar and bioenergy, edible oil products, milling products and fertilizer. The main agribusiness segment buys, processes, stores, transports and sells a wide variety of agricultural products.
Analysts project a 5.9% increase in Bunge's yearly earnings for 2019. Bunge has a market cap value of $9.7 billion. Its dividend yield is 2.91%. The stock traded at $68 in Sept. 2018, up 2.4% YTD, but the consensus analyst price target put the stock significantly higher, at $83 a share. Analysts expect Bunge to grow earnings at an annualized rate of 10.1% over the next five years. It's also enticing from a valuation perspective, trading at a forward price-to-earnings (P/E) ratio of 12.2.
Although just founded in 2004, The Mosaic Company has quickly risen to prominence as the largest producer of potash and phosphate fertilizer in the United States. It mines, produces, and markets phosphate and potash crop nutrients globally in nearly 50 countries.
Mosaic stock does well as the prices for nitrogen and phosphate turn to the upside. There’s no denying that there is a long-term rise in demand for agricultural products globally and an accompanying rise in demand for fertilizer products. Mosaic has been reducing total operating expenses and capital expenditures (CAPEX). The stock is an attractive value play, with a P/B ratio.
At $32.50 a share, Mosaic was up 26.6% YTD in Sept. 2018. Mosaic shareholders are paid a dividend yield of 0.31%. The company has a market capitalization of $12.51 billion. It's expected to grow earnings by almost 30% a year for the next five years.