Demand for agriculture remains constant, given the necessity of food for global sustenance and survival. Also, in recent periods, the market demand is further surging with evolving consumer behaviors and changing market trends, fueling the agricultural industry’s demand. This is highly benefiting agribusinesses and promoting their activities. Currently, the market is undergoing transformative changes owing to increasing food demand, and agricultural trends.
Given this backdrop, it could be wise to consider fundamentally strong agriculture stocks Yara International ASA (YARIY), Dole plc (DOLE), and ICL Group Ltd (ICL) as global food demand surges.
In 2024, United States led the market for global exports during the first half. In the second quarter, world exports of Packaged Food and Beverages to USA recorded a year-over-year increase of nearly €1.7 billion ($1.83 billion) indicating strong food demand. Revenue in the US food market is expected to grow at a CAGR of 4.1% during the forecast period (2024-2029).
These food demand trends are fueling demand for agricultural products, subsequently resulting in increased crop cultivation and production activities. Also, rising worldwide population, globalization of trade and favorable government policies have vastly contributed to the market growth.
With this, the agriculture market is expected to grow to $19.29 trillion by 2028, exhibiting growth at a CAGR of 7.7% driven by trends like vertical farming, sustainable agriculture practices, water management solutions, adoption of new technologies, and organic farming.
Considering the encouraging economic trends, let’s delve into the fundamentals of the top three Agriculture stocks, beginning with the third choice.
Stock #3: Yara International ASA (YARIY)
Headquartered in Oslo, Norway, YARIY offers crop nutrition and industrial solutions internationally. It offers ammonium- and urea-based fertilizers, coatings, biostimulants, organic-based fertilizers, as well as nitrate, calcium nitrate, micronutrient, and fertigation fertilizers.
On October 2, YARIY unveiled its new ammonia import terminal in Brunsbüttel, Germany, having capabilities of importing up to three million tons of low-emission ammonia annually. The facility is aimed at supporting the German hydrogen economy and contribute to the country’s energy transition toward a low-carbon future.
During the third quarter that ended September 30, 2024, YARIY reported revenue and other income of $3.65 billion. Its operating income was $309 million, up 147.2% year-over-year. In addition, the company’s adjusted EBITDA grew 52.1% from the year-ago value to $604 million.
Furthermore, the company’s net income and EPS came in at $286 million and $1.12 for the quarter, respectively.
Analysts expect YARIY’s revenue for the fourth quarter (ending December 2024) to grow 1.2% year-over-year to $3.65 billion. For the fiscal year 2025, the company’s revenue is expected to increase 4.5% year-over-year to $14.68 billion.
Shares of YARIY have surged 5.8% over the past three months and 1% over the past six months to close the last trading session at $14.64.
YARIY’s solid fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
YARIY has a B grade for Value and Stability. It is ranked #7 out of 24 stocks in the Agriculture industry.
In addition to the POWR Ratings we’ve stated above, we also have YARIY ratings for Momentum, Quality, Growth, and Sentiment. Get all YARIY ratings here.
Stock #2: Dole plc (DOLE)
Based in Dublin, Ireland, DOLE engages in sourcing, processing, marketing, and distribution of fresh fruit and vegetables worldwide. The company operates in three segments: Fresh Fruit; Diversified Fresh Produce - EMEA; and Diversified Fresh Produce - Americas and ROW.
On August 13, DOLE’s Board of Directors declared a cash dividend for the second quarter of 2024 of $0.08 per share, paid on October 3, 2024 to shareholders of record on September 11, 2024. DOLE pays an annual dividend of $0.32, which translates to a yield of 1.93% at the current share price. Its four-year average dividend yield is 2.14%.
In terms of forward non-GAAP P/E, DOLE is trading at 13.33x, 24% lower than the industry average of 17.53x. Similarly, the stock’s forward Price/Sales multiple of 0.19 is 85.1% lower than the 1.28 industry average. Also, its forward EV/EBITDA of 7.28x is considerably lower than the industry average of 11.02x.
DOLE reported revenue of $2.12 billion during the second quarter that ended June 30, 2024. Its adjusted gross profit rose 2% year-over-year to $200.74 million. The company’s adjusted operating income of $85.94 million indicates growth of 1.5% from the year-ago value.
Furthermore, net income attributable to DOLE came in at $80.12 million and $0.84 per share, up 89.5% and 90.9% from the prior year’s quarter, respectively. Its adjusted EBITDA rose 2.2% from the year-ago value to $125.42 million.
Analysts expect DOLE’s revenue and EPS for the fiscal year (ending December 2024) to increase marginally year-over-year to $8.27 billion and $1.24, respectively. Also, the company topped the consensus EPS estimates in all four trailing quarters, which is impressive.
DOLE’s stock has gained 33.3% over the past six months and 43.8% over the past year to close the last trading session at $16.58.
DOLE’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Value, Stability, and Sentiment. DOLE is ranked #2 among the 24 stocks in the Agriculture industry.
Click here to access DOLE’s ratings for Quality, Growth, and Momentum.
Stock #1: ICL Group Ltd (ICL)
Headquartered in Tel Aviv, Israel, ICL operates as a specialty minerals and chemicals company globally. It operates in Industrial Products; Potash; Phosphate Solutions; and Growing Solutions segments. It produces bromine out of a solution that is a by-product of the potash production process, and bromine-based compounds.
On September 25, ICL announced a partnership with Orbia to supply a phosphorus compound for making LiPF6 battery materials. The partnership will strengthen the companies’ position in North America’s battery supply chain.
On September 24, ICL opened a new food specialty plant in China, which will create solutions for the meat, poultry, and seafood industries, boosting ICL’s innovation and customization while expanding its presence in the Chinese market.
For the second quarter that ended June 30, 2024, ICL reported sales of $1.75 billion, up 1% from the prior quarter. Its adjusted operating income grew 4.7% quarter-on-quarter to $225 million. The company’s adjusted EBITDA increased 4.1% from the previous quarter to $377 million.
Furthermore, adjusted net income attributable to shareholders and EPS came in at $126 million and $0.10, up 6.8% and 11.1% from the prior quarter, respectively.
Street expects ICL’s revenue for the fiscal year (ending December 2025) to increase 6.3% year-over-year to $7.38 billion. Similarly, the company’s EPS is expected to grow 26.5% year-over-year to $0.44 for the next year. Furthermore, ICL has surpassed the consensus EPS estimates in each of the trailing four quarters.
ICL’s stock has gained 3.1% over the past month to close the last trading session at $4.23.
ICL’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Value and a B for Quality and Sentiment. Within the same industry, ICL has topped among the 24 stocks.
Click here to access additional ratings of ICL for Stability, Growth, and Momentum.
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YARIY shares were unchanged in after-hours trading Friday. Year-to-date, YARIY has declined -17.09%, versus a 27.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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