The agriculture sector is poised for growth due to rising food prices. Also, technological innovations such as smart tractors, advanced fertilizers, precision farming, and AI enhance productivity and long-term growth. Additionally, sustainable practices aimed at ensuring food security further improve the industry's outlook.
Therefore, fundamentally strong agriculture stocks like Yara International ASA (YARIY), ICL Group Ltd (ICL), and Dole plc (DOLE), present promising investment opportunities.
In September 2024, food prices rose by 0.4%, primarily due to increases in grocery prices for meats and vegetables. Over the past year, food prices have increased by 2.3%, highlighting persistent inflationary pressures. This trend suggests strong consumer demand and presents agriculture as a potentially lucrative investment opportunity, as higher prices can boost revenues and profitability for producers.
Meanwhile, rising global food demand continues to bolster investment in agriculture stocks, especially in expanding markets. The global agriculture market is projected to reach $19.29 trillion by 2028, with a 7.7% CAGR. In Q2 2024, agriculture, forestry, and fishing significantly boosted real GDP in 29 states, contributing to the national GDP growth rate of 3.0%, highlighting agriculture's importance.
Given these favorable trends, let’s take a closer look at the fundamentals of the three featured Agriculture stocks, beginning with the third choice.
Stock #3: Yara International ASA (YARIY)
Headquartered in Oslo, Norway, YARIY provides crop nutrition and industrial solutions across Norway, the European Union, Europe, Africa, Asia, North and Latin America, Australia, and New Zealand. The company offers ammonium- and urea-based fertilizers, coatings, biostimulants, organic-based fertilizers, as well as nitrate, calcium nitrate, micronutrient, and fertigation fertilizers.
In terms of the trailing-12-month levered FCF margin, YARIY’s 11.18% is 113.3% higher than the 5.24% industry average. Likewise, its 0.88x trailing-12-month asset turnover ratio is 31.7% higher than the 0.67x industry average. Furthermore, its 8.09% trailing-12-month Capex / Sales is 3.4% higher than the 7.82% industry average.
In the fiscal second quarter ended June 30, 2024, YARIY’s revenue and other income amounted to $3.53 billion, while its operating income was $213 million. The company’s net income was $3 million, and its adjusted EBITDA stood at $513 million, representing a year-over-year increase of 103.6%.
Analysts expect YARIY’s revenue for the quarter ended September 30, 2024, to increase marginally year-over-year to $3.85 billion. YARIY’s stock has gained 18.8% over the past three months to close the last trading session at $16.16.
YARIY’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Growth and a B for Value and Stability. It is ranked #3 out of 23 stocks in the Agriculture industry. To access other ratings of YARIY for Momentum, Stability, Sentiment, and Quality, click here.
Stock #2: ICL Group Ltd (ICL)
Headquartered in Tel Aviv, Israel, ICL and its subsidiaries operate as a specialty minerals and chemicals company worldwide. It operates in four segments: Industrial Products, Potash, Phosphate Solutions, and Growing Solutions.
On September 25, 2024, ICL announced a memorandum of understanding with Orbia to supply a phosphorus compound for producing LiPF6 battery materials, enhancing their role in North America's battery supply chain.
On September 24, 2024, ICL announced the opening of a new food specialty plant in China. This facility will produce solutions for the meat, poultry, and seafood industries, enhancing ICL's innovation and customization efforts while expanding its presence in the Chinese market.
In terms of the trailing-12-month EBIT margin, ICL’s 11.02% is 1.5% higher than the 10.87% industry average. Its 6.08% trailing-12-month net income margin is 20% higher than the 5.07% industry average. Also, its 3.82% trailing-12-month Return on Total Assets is 60.8% higher than the 2.37% industry average.
During the second quarter ended June 30, 2024, ICL’s sales came in at $1.75 billion, and its adjusted operating income stood at $225 million. The company’s adjusted net income attributable to shareholders and adjusted earnings per share came in at $126 million and $0.10, respectively. Also, its adjusted EBITDA was $377 million.
Street expects ICL’s EPS for the quarter ending March 31, 2025, to increase 27.8% year-over-year to $0.12. Its revenue for fiscal 2025 is expected to grow 6.7% year-over-year to $7.40 billion. ICL surpassed the Street EPS estimates in each of the trailing four quarters. Over the past month, the stock has declined marginally to close the last trading session at $3.99.
ICL’s POWR Ratings reflect strong prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
ICL is ranked 32 in the same industry. It has an A grade for Value and a B for Quality. In addition to the POWR Ratings grades I’ve just highlighted, you can see ICL’s ratings for Growth, Momentum, Stability, and Sentiment, here.
Stock #1: Dole plc (DOLE)
Headquartered in Dublin, Ireland, DOLE engages in sourcing, processing, marketing, and distributing fresh fruit and vegetables worldwide. The company operates through three segments: Fresh Fruit; Diversified Fresh Produce - EMEA; and Diversified Fresh Produce - Americas and ROW. It offers bananas, pineapples, grapes, berries, avocados, organic produce, cherries, apples, potatoes, and onions.
In terms of the trailing-12-month Return on Common Equity, DOLE’s 14.56% is 39.1% higher than the 10.47% industry average. Similarly, its 1.85x trailing-12-month asset turnover ratio is 121.9% higher than the 0.83x industry average. Its 4.91% trailing-12-month Return on Total Assets is 15.9% higher than the 4.24% industry average.
DOLE reported net revenues of $2.12 billion for the fiscal second quarter ended June 30, 2024. Likewise, its adjusted net income and adjusted earnings per share came in at $47.03 million and $0.49, respectively. Moreover, the company’s adjusted EBITDA for the period increased by 2.2% year-over-year to $125.42 million.
For the quarter ending March 31, 2025, DOLE’s EPS is expected to increase 5.7% year-over-year to $0.45. For fiscal 2025 its revenue is expected to rise marginally year-over-year to $8.34 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 45% over the past year to close the last trading session at $16.20.
DOLE’s bright outlook is reflected in its POWR Ratings. It has an overall rating of B, translating to a Buy in our proprietary rating system.
It has a B grade for Value, Stability, and Sentiment. It is ranked first in the Agriculture industry. To see DOLE’s Growth, Momentum, and Quality ratings, click here.
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YARIY shares were trading at $16.15 per share on Monday afternoon, down $0.09 (-0.55%). Year-to-date, YARIY has declined -7.84%, versus a 24.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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