By Ann McQueen
Agriculture stocks are garnering a lot attention as speculators anticipate increased demand worldwide for fertilizers, crops, food production machines and equipment, and food for increasing populations. We have identified five agriculture stocks we think investors should consider.
Cresud S.A.C.I.F. y A. (CRESY)
This small cap company produces basic agricultural commodities in Latin America. Founded in 1936, it is headquartered in Buenos Aires, Argentina. It hasn’t gotten much attention in terms of headlines, but this article speaks volumes.
CRESY’s dividend yield is 2.4 percent. Its price-to-earnings ratio is 23.05, and earnings per share is $0.60. This compares to its large cap American competitor Archer Daniels Midland Company’s (ADM) 2.3 percent dividend yield, price-to-earnings ratio of 8.76, and earnings per share of $3.13. CRESY’s gross margin of 47.02 percent indicates that it is more profitable than ADM, which has a gross margin of only 5.33 percent. CRESY’s quarterly revenue growth looks strong at 30.7 percent, as does ADM’s 45.6 percent. CRESY’s return on equity is 8.35 percent compared to ADM’s 12.06 percent. As for the companies’ debt to equity ratios, CRESY’s 89 is not as attractive as ADM’s 54.78. As for share price, CRESY is trading near the low side of its 52-week range of $13.28 - $20.07. ADM is also trading near the low side of its $26-to-$38.02 range.
We hesitated to compare the small-cap CRESY to the large-cap ADM, but it is important to note that CRESY gives ADM a run for its money. Investors who are comfortable with the risks associated with small cap foreign companies should definitely consider CRESY.
Deere & Company (DE)
This article discusses the increase in U.S. factory orders, and includes DE on its list of the most profitable large cap industrial stocks of this year. We looked at some of DE’s key numbers to determine how the company holds up to its competition. DE’s market capitalization is $32.2 billion. Caterpillar Inc. is larger with $55.14 billion. Kubota at $48.32 billion is the second-largest of the three.
DE’s dividend yield is 2.1 percent. CAT’s dividend yield is 2.2 percent, and KUB’s is the lowest at 1.9 percent. DE’s price-to-earnings ratio is 12.7, compared to 14.17 for CAT. KUB is very expensive with a price-to-earnings ratio of 64.63. DE’s earnings per share is the highest at $6.08, CAT comes in second with $6.05, and KUB’s $.59 barely compares. When gross margin is considered the indicator of profitability, DE is most profitable at 29.32 percent, KUB’s 27.24 percent is slightly less, and CAT’s 27 percent places it as third. DE’s quarterly revenue growth was the slowest at 22.5 percent. CAT’s quarterly revenue growth was the greatest at 36.7 percent, and KUB showed similar growth of only 8 percent.
Potash Corp. of Saskatchewan, Ind. (POT)
The headlines bode well for this Canadian seller of fertilizers and related industrial and feed products. It is on one Motley Fool writer’s “shopping list.”
Here’s what we found out when we looked at POT’s numbers: Its dividend yield is 0.5 percent. Its price-to-earnings ratio is 21.51, and earnings per share is $2.75. With a market capitalization of $50.54 billion, it is slightly smaller than BASF SE (OTCQX:BASFY) and larger than Mosaic Co. (MOS), which has a market capitalization of $31.43 billion. POT’s gross margin of 48.3 percent indicates it is more profitable than BASF.PK, with a gross margin of 27.99 percent, and MOS with its gross margin of 31.41 percent. BASF.PK does not pay a dividend, its price-to-earnings ratio is attractive at 6.59, and its earnings per share is $9.60. MOS offers a dividend yield of 0.3 percent, its price-to-earnings ratio is 12.52, and earnings per share is $5.62.
Agrium Inc. (AGU)
AGU’s dividend yield is 0.1 percent, its price-to-earnings ratio is 12.5, and earnings per share are $6.88. AGU’s market capitalization is $13.58 billion and 52-week trading range is $71.39 to $99.14. Its gross margin is 27.07 percent, which is below the industry average of 31.01 percent. Its competitor CF, which is discussed in more detail below, operates at higher profitability as indicated by its gross margin of 39.88 percent. POT, mentioned above, shows a gross margin of 48.3 percent. AGU’s return on equity is 19.76 percent, and its debt to equity ratio is 43.37.
CF Industries Holdings Inc. (CF)
What's to like about CF? Though its dividend yield is 0.9 percent, its price-to-earnings ratio is 13.15 and earnings per share is $14.12. Its return on equity is 24.65 percent. Its quarterly revenue growth is 37.8 percent. We also like its gross margin of 39.88 percent. This Investopedia article lists CF as an August winner.