July 3, 2022

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Is Food In You

10 Food Stocks to Buy Amid Upcoming Global Crisis

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In this article, we discuss 10 food stocks to buy amid the upcoming global crisis. If you want to see more stocks in this selection, click 5 Food Stocks to Buy Amid Upcoming Global Crisis.

The Russian invasion of Ukraine led to a harrowing global food crisis, raising the already inflated food prices. The war in Ukraine propelled the Food and Agriculture Organization’s food price index to its highest level in March since 1990. 

The post-COVID supply chain challenges, climate change, soaring energy prices, trade restrictions, and taxes have caused a strain on the food market for the last two years. In addition to the Russia-Ukraine war, these factors have thrust the global market towards food inflation. Russia and Ukraine are major producers of commodities, and war and the consequent sanctions on Russian exports tightened the global food supply further. 

World Bank Pledges $30 Billion To Tackle The Food Security Crisis

Although easing trade restrictions will lead to marginally better food conditions, The World Bank announced on May 18 its plans to tackle the ongoing food security crisis. Investments up to $30 billion were disclosed for existing and new projects in the fields of agriculture, nutrition, social protection, water, and irrigation. This financing will boost food and fertilizer production, improve food systems, assist in easier global trade, and support vulnerable growers and suppliers.

On May 19, UN secretary general António Guterres reiterated that grain and fertilizer shortages caused by the Russia-Ukraine war, higher temperatures, and pandemic-related supply concerns can essentially push tens of millions of people towards food insecurity, as equity markets witnessed share prices drop sharply yet again on the back of rampant inflation and threats of a global recession. World Bank president David Malpass advised countries to improve their local energy and fertilizer production, support farmers with respect to seeds, harvests, and enhanced crop yields, remove trade barriers, and switch to biofuel. 

The upcoming global crisis is a positive catalyst for food, agriculture, and fertilizer companies, and smart investors are piling into food stocks to benefit from the potential gains in a tight market. Some of the most notable food stocks to watch now include Archer-Daniels-Midland Company (NYSE:ADM), Nutrien Ltd. (NYSE:NTR), and The Mosaic Company (NYSE:MOS). 

Photo by Darla Hueske on Unsplash

Our Methodology 

We chose the food stocks that display strong business fundamentals and recently received positive analyst ratings. We have also mentioned the hedge fund sentiment around the stocks as of Q1 2022, using Insider Monkey’s extensive database of 900+ top funds for this analysis. Since elite hedge funds have brilliant minds formulating their stock picking strategies, Insider Monkey believes it is a wise strategy to imitate their stock picks. 

Food Stocks to Buy Amid Upcoming Global Crisis

10. Bunge Limited (NYSE:BG)

 

Number of Hedge Fund Holders: 55

Bunge Limited (NYSE:BG) is a Missouri-based agribusiness and food company, operating through four segments – Agribusiness, Refined and Specialty Oils, Milling, and Sugar and Bioenergy. The company distributes its products and services worldwide. 

On April 27, Bunge Limited (NYSE:BG) posted its Q1 2022 results, reporting earnings per share of $4.26 and a revenue of $15.88 billion, above Street forecasts by $1.32 and $1.25 billion, respectively. The Q1 revenue increased 22.52% year-over-year. The stock gained notably by significant beats on top and bottom line earnings consensus, further reiterating a robust bull thesis on agriculture plays.

On May 12, Bunge Limited (NYSE:BG) declared a $0.625 per share quarterly dividend, a 19% increase from its prior dividend of $0.525. The dividend is distributable on September 2, to shareholders of the company as of August 19. 

Credit Suisse analyst Robert Moskow on April 28 raised the price target on Bunge Limited (NYSE:BG) to $140 from $120 after “strong” Q1 results. The analyst reiterated an Outperform rating on the shares.

Among the hedge funds tracked by Insider Monkey, 55 funds were bullish on Bunge Limited (NYSE:BG) at the end of March 2022, up from 38 funds in the earlier quarter. Billionaire Israel Englander’s Millennium Management held the leading position in the company, comprising 1.65 million shares worth $183.6 million. 

In addition to Archer-Daniels-Midland Company (NYSE:ADM), Nutrien Ltd. (NYSE:NTR), and The Mosaic Company (NYSE:MOS), elite funds are pouring into Bunge Limited (NYSE:BG) amid fears of an upcoming global crisis. 

Here is what Old West Investment Management has to say about Bunge Limited (NYSE:BG) in its Q1 2022 investor letter:

“Bunge (pronounced BUN-GEE) Ltd (NYSE:BG) is one of the biggest agribusinesses and food companies in the world. There are four worldwide companies that dominate the sector, the others being Archer-Daniels-Midland Cargill, and Dreyfuss. One of our favorite ways to screen for new ideas is following insider buying. When I saw the Form 4 filed by new Bunge CEO Greg Heckman, his purchase of $9 million of BG stock intrigued me. My initial thought was the company gave him the stock as a signing bonus. I contacted BG Investor Relations and asked whether it was a signing bonus or did Heckman actually write a check for $9 million. IR assured me it was his own hard-earned money that he invested in the company he was about to run.

Heckman was a long time executive at Conagra Foods who obviously sensed opportunity at BG. One of his first moves as CEO was to move the company’s HQ from New York to St. Louis, right in the middle of America’s breadbasket. BG had been plagued for years with poor decisions by underperforming management. Heckman’s decision to move to St. Louis was indicative of a no-nonsense style and he would commence cutting expenses and selling non-core assets…” (Click here to see the full text)

9. The Mosaic Company (NYSE:MOS)

 

Number of Hedge Fund Holders: 66

Another notable food stock to buy amid the upcoming global crisis is The Mosaic Company (NYSE:MOS), a Florida-based producer of concentrated phosphate and potash crop nutrients. The company operates through three segments – Phosphates, Potash, and Mosaic Fertilizantes.

On May 19, The Mosaic Company (NYSE:MOS) announced a $0.15 per share quarterly dividend, a 33.3% increase from its earlier dividend of $0.1125. The dividend is payable on June 16, to shareholders of record on June 2. 

Piper Sandler analyst Charles Neivert on May 31 raised the price target on The Mosaic Company (NYSE:MOS) to $85 from $80 and maintained an Overweight rating on the stock. The analyst believes that grain prices will “both remain elevated and reset the standard for midcycle levels going forward”. The soaring grain prices support high nutrient values, the analyst told investors in a research note.

According to Insider Monkey’s data, 66 hedge funds held long positions in The Mosaic Company (NYSE:MOS) at the end of the first quarter of 2022, up from 46 funds in the earlier quarter. The collective stakes held in Q1 increased to $1.5 billion from $1.3 billion a quarter ago. Eric W. Mandelblatt’s Soroban Capital Partners is the largest position holder in the company, with approximately 5 million shares worth $328.3 million. 

Here is what Ariel Investments has to say about The Mosaic Company (NYSE:MOS) in its Q4 2021 investor letter:

“We continue to believe recent aggressive fiscal and monetary policy will drive high levels of intransient (rather than transitory) inflation. Recent inflation numbers have exceeded our hawkish predictions. While we believed the Consumer Price Index might rise +4% in 2021, double the Fed target of +2%; it rose +7%, the highest level in forty years. Ariel Focus Fund has been well positioned for this environment as natural resource and material companies such as The Mosaic Company (MOS) which returned +72.15% for the year. This was one of our two largest holdings at year-end and has performed well very early into 2022.”

8. Bayer Aktiengesellschaft (OTC:BAYRY)

 

Number of Hedge Fund Holders: 1

Bayer Aktiengesellschaft (OTC:BAYRY) is a German life science company that works through Pharmaceuticals, Consumer Health, and Crop Science segments. The company’s Crop Science division offers chemical and biological crop protection products, improved plant traits, and digital agricultural solutions. In addition to that, Bayer Aktiengesellschaft (OTC:BAYRY) also deals in crop breeding, propagation, and production of seeds.

On May 10, Bayer Aktiengesellschaft (OTC:BAYRY) reported its Q1 financial results, posting earnings per share of $0.93, beating market consensus estimates by $0.16. Revenue over the period came in at $15.42 billion, outperforming analysts’ predictions by $935.41 million. 

UBS analyst Michael Leuchten lifted the price target on Bayer Aktiengesellschaft (OTC:BAYRY) to EUR 96 from EUR 90 and reiterated a Buy rating on the shares. According to Insider Monkey’s Q1 data, Frederick Disanto’s Ancora Advisors held 710 shares of Bayer Aktiengesellschaft (OTC:BAYRY), worth $12,000. 

Here is what Mittleman Global Value Equity Fund has to say about Bayer Aktiengesellschaft (NYSE:BAYRY) in its Q1 2022 investor letter:

“Bayer’s defensive business mix, along with prodding for change from an activist investor, seemed to catalyze the stock’s outperformance during Q1 2022, and MIM envisions significant further upside. MIM hasn’t owned a large cap pharmaceutical company since a very successful foray into Pfizer (PFE) just over 10 years ago, when the market was overly concerned about their “patent cliff” with their patent on Lipitor (then the world’s best-selling drug) expiring in 2011. The stock got too cheap, revenues didn’t collapse, and MIM made a very nice return in less than one year. MIM hopes to reprise that experience with its recent purchase of Bayer, where fears of a patent cliff combined with a major product liability settlement have created a similar scenario (recall Merck and its $5B Vioxx settlement in 2007, Merck shares more than doubled off their 2005 lows leading into that settlement). Bayer’s stock entered the portfolio in late December 2020/early January 2021 and promptly went nowhere for the duration of 2021. The price had been ravaged for years by having overpaid for their 2018 acquisition of Monsanto for $67B (15x EBITDA of $4.5B) and then having that same acquisition subject them to massive product liability settlements (over $10B+) from Monsanto’s Roundup herbicide, which many have claimed caused them to get cancer. As of 31 December 2017, Bayer (pre-Monsanto) had an enterprise value of $108B, about 10x EBITDA of $11B. Today, with Bayer’s ADRs at $17.12, the EV for the combined entity is again $108B, but that’s only 7.5x the $14.5B in EBITDA estimated for 2023…” (Click here to see the full text)

7. CNH Industrial N.V. (NYSE:CNHI)

 

Number of Hedge Fund Holders: 33

CNH Industrial N.V. (NYSE:CNHI) is a London-based company that provides farm machinery and implements such as crawler tractors, combines, cotton pickers, grape and sugar cane harvesters, hay and forage equipment, planting and seeding equipment, soil preparation and cultivation implements, and material handling equipment. 

CNH Industrial N.V. (NYSE:CNHI) reported earnings for Q1 2022 on May 3, posting an EPS of $0.28, beating market consensus estimates by $0.05. The revenue of $4.65 billion also outperformed Street predictions by almost $50 million. 

CNH Industrial N.V. (NYSE:CNHI) announced that its unit, CNH Industrial Capital, priced $500 million in aggregate principal amount of 3.95% notes due 2025, with an issue price of 99.469%. The notes will pay interest biannually on May 23 and November 23 each, starting on November 23, 2022.

On April 14, Deutsche Bank analyst Nicole DeBlase maintained a Buy recommendation on CNH Industrial N.V. (NYSE:CNHI) but lowered the price target on the stock to $20 from $21. For the Q1 results in the multi-industry and machinery sector, the analyst thinks estimates look largely achievable since many companies posted conservative guidance. 

According to Insider Monkey’s Q1 data, 33 hedge funds were bullish on CNH Industrial N.V. (NYSE:CNHI), compared to 35 funds in the earlier quarter. Harris Associates is the leading shareholder of the company, with 92.3 million shares worth about $1.5 billion. 

Here is what Longleaf Partners Fund has to say about CNH Industrial N.V. (NYSE:CNHI) in its Q4 2021 investor letter:

“CNH Industrial (55%, 2.51%; 16%, 0.65%), a leading farm equipment and commercial vehicle manufacturer globally, was another top performer for the year. CNH reported strong results throughout the year, beating our initial conservative expectations. The US agricultural cycle has been firmly in the company’s favor, driven by commodity price strength, healthy farm balance sheets, advanced technology adoption, and aging fleets feeding replacement demand. We believe we are past the mid-cycle but expect the strong upcycle to continue with the solid order books and strong visibility. On December 31, 2021, CNHI completed the demerger of its on-highway business, which includes its IVECO commercial vehicles and FPT powertrain businesses. This transaction creates a pure play off-highway company comprising the higher-multiple agricultural, construction and specialty vehicle businesses. We expect a narrowing of the discount to the net asset value once we have two focused companies valued at peer multiples.”

6. Corteva, Inc. (NYSE:CTVA)

 

Number of Hedge Fund Holders: 39

Corteva, Inc. (NYSE:CTVA) was incorporated in 2018 and is headquartered in Indianapolis, Indiana. The company specializes in advanced germplasm and traits that produce optimum yield for farms. In addition to that, Corteva, Inc. (NYSE:CTVA) offers products that protect crops against weeds, insects, and diseases. 

On May 4, Corteva, Inc. (NYSE:CTVA) reported its Q1 financial results, posting earnings per share of $0.97, above consensus by $0.16. The revenue of $4.60 billion also exceeded Street estimates by $135.82 million. The company also declared on April 29 a $0.14 per share quarterly dividend, in line with previous. The dividend is payable on June 15, to shareholders of the company as of May 13. 

Deutsche Bank analyst David Begleiter on May 31 raised the price target on Corteva, Inc. (NYSE:CTVA) to $72 from $64 and kept a Buy rating on the shares.

Among the hedge funds tracked by Insider Monkey, 39 funds were long Corteva, Inc. (NYSE:CTVA) at the end of Q1 2022, compared to 42 funds in the prior quarter. Jeffrey Smith’s Starboard Value LP is the biggest shareholder of the company, with almost 6 million shares worth $344.6 million. 

Like Archer-Daniels-Midland Company (NYSE:ADM), Nutrien Ltd. (NYSE:NTR), and The Mosaic Company (NYSE:MOS), elite investors are monitoring Corteva, Inc. (NYSE:CTVA) amid the current food crisis. 

Here is what Aristotle Capital Management Value Equity has to say about Corteva, Inc. (NYSE:CTVA) in its Q1 2022 investor letter:

“Corteva Agriscience, one of the world’s largest seed and crop protection companies, was a primary contributor for the quarter. Due to its respected brand and the value-added benefits of its patented seeds and crop protection solutions for farmers, Corteva has been able to more than offset input cost inflation with sustainable price increases. In addition, the company’s ongoing mix shift to higher-margin, premium products, a catalyst we previously identified, is aiding both sales and profit growth. Shares were likely also buoyed by the rise in crop prices. Market participants, perhaps eager to chase short-term trends, poured into the sector. At Aristotle Capital, we look past such gyrations and, as long-term investors, do not attempt to predict short-term changes in commodity prices. We remain excited about what we view to be high-quality characteristics and fundamental improvements that permeate Corteva’s business, not the least of which include its pricing power.”

Click to continue reading and see 5 Food Stocks to Buy Amid Upcoming Global Crisis

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Disclosure: None. 10 Food Stocks to Buy Amid Upcoming Global Crisis is originally published on Insider Monkey.



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