We recently compiled a list of the 13 Best Farmland and Agriculture Stocks To Invest In According to Hedge Funds. In this article, we are going to take a look at where The Mosaic Company (NYSE:MOS) stands against the other farmland and agriculture stocks.
Revolutionizing Agriculture: Technology in Modern Farming
The farmland and agriculture sector is crucial for global food security and economic stability. As the world population continues to grow, the demand for food increases, necessitating innovative practices in agriculture and farming. Recent trends indicate a significant shift towards technology-driven agriculture, which aims to enhance productivity while promoting sustainability.
In the first quarter of 2024, McKinsey surveyed around 4,400 farmers across Europe, India, Latin America, and North America to understand the factors influencing their profitability and technology adoption. The firm conducted a similar survey in 2022. The findings indicate that while farmers are increasingly adopting technology, the pace remains slow, with a three-percentage-point rise since 2022 in those using or willing to use at least one new digital tool to improve operations.
READ ALSO: 8 Best Fertilizer Stocks To Buy Now and 10 Stocks with Consistent Growth to Buy.
North American farmers lead in technology adoption. In the US, 61% of farmers are using or willing to adopt digital agronomy. Additionally, 51% are using or willing to adopt precision agriculture hardware, and 38% are adopting remote-sensing technologies. Latin America showed the most significant growth in technology adoption, with a remarkable ten-percentage-point increase from 2022 to 2024. Farmers around the world are more inclined to adopt new technologies that directly improve operations. According to the data, digital agronomy and precision agriculture hardware are the most popular technologies around the world.
The survey highlights that in the US, larger farms are 45% more likely to adopt agricultural technology compared to smaller farms. This trend can be attributed to the greater scale needed for a favorable return on investment (ROI) in agtech. Despite the challenges posed by rising input costs and extreme weather conditions, farmers are looking towards sustainable practices and innovative technologies to enhance their productivity and profitability. Organizations that provide technology and services have a unique opportunity to cater to farmers’ diverse needs across different regions.
Our Methodology
To compile our list of the 13 best farmland and agriculture stocks to invest in according to hedge funds, we used the Finviz and Yahoo stock screeners to find the largest farmland and agriculture companies. We also reviewed our own rankings and consulted various online resources.
From an initial pool of more than 30 farmland and agriculture stocks, we focused on the top 13 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 13 best farmland and agriculture stocks to invest in are ranked in ascending order based on the number of hedge funds holding stakes in them, as of Q3 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A farmer carrying a bag of fertilized over his shoulder signifying the fertilizers the company produces.
The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holders: 34
The Mosaic Company (NYSE:MOS) is a leading global producer of concentrated phosphate and potash fertilizers, playing a vital role in the agriculture industry. The company extracts, produces, and supplies millions of tonnes of high-quality fertilizers each year, significantly supporting farmland and agricultural productivity.
In the third quarter of 2024, The Mosaic Company (NYSE:MOS) reported revenues of $2.8 billion, a 21% decrease from the same quarter last year, primarily due to lower selling prices. However, the company achieved a net income of $122 million, a significant recovery from a net loss of $4 million in Q3 2023. This turnaround demonstrates The Mosaic Company’s (NYSE:MOS) resilience and ability to address challenges such as weather-related disruptions.
The company is strategically focusing on capital allocation to enhance its growth potential. The company has completed several projects that require minimal capital investment but promise high returns. Notable achievements include the completion of an 800,000-tonne Riverview MicroEssentials capacity conversion and the 500,000-tonne Esterhazy potash compaction project in Q2 2024.
Looking ahead, The Mosaic Company (NYSE:MOS) plans to enhance its milling capacity by 400,000 tonnes with the Esterhazy Hydrofloat project, expected to be completed by mid-2025. Additionally, a new 1 million-tonne blending facility in Palmeirante, Brazil is expected to be finished by the third quarter of 2025.
To improve efficiency, The Mosaic Company (NYSE:MOS) is working on cost reduction initiatives aimed at achieving a $150 million run rate by the end of 2025. The company also expects to lower its 2024 capital expenditures by $200 million compared to 2023 levels. Additionally, in the first nine months of 2024, The Mosaic Company (NYSE:MOS) returned $415 million to shareholders.
With its strong market position, commitment to operational improvements, and focus on shareholder returns, The Mosaic Company (NYSE:MOS) represents an attractive investment opportunity.
Overall, MOS ranks 6th on our list of the best farmland and agriculture stocks to invest in according to hedge funds. While we acknowledge the potential of MOS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MOS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.