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 Archer-Daniels-Midland Company (NYSE:ADM) 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.
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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 wide angle view of a larger agricultural field with a group of farmers examining crops.
Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 34
Archer-Daniels-Midland Company (NYSE:ADM) is an American multinational corporation specializing in food processing and the trading of agricultural commodities. As one of the largest agricultural processing companies globally, the company plays a vital role in connecting farmers with markets, producing ingredients for food, beverages, supplements, and animal feed.
In the third quarter of 2024, which ended on September 30, the company reported earnings before income taxes of $108 million, a decline of 90% compared to the same quarter last year. This drop was primarily due to falling prices for key crops like corn and soybeans, which have hit near four-year lows. Additionally, Archer-Daniels-Midland Company (NYSE:ADM) faced a non-cash impairment charge of $461 million related to its investment in Wilmar.
Despite these challenges, Archer-Daniels-Midland Company (NYSE:ADM) remains a strong player in the market. The company declared a cash dividend of 50 cents per share on November 8, 2024, marking its 372nd consecutive quarterly payment. This long-standing commitment to returning value to shareholders highlights Archer-Daniels-Midland Company’s (NYSE:ADM) stability and reliability.
To address current market conditions, the company is focusing on improving productivity and operational efficiency. In the second quarter of 2024, Archer-Daniels-Midland Company (NYSE:ADM) initiated projects aimed at achieving $500 million in cost reductions over the next two years. These efforts are expected to significantly improve savings by the end of 2024.
The combination of a strong dividend history, ongoing cost-saving initiatives, and a solid market position makes Archer-Daniels-Midland Company (NYSE:ADM) an attractive investment opportunity in the farmland and agriculture sector.
Overall, ADM ranks 5th on our list of the best farmland and agriculture stocks to invest in according to hedge funds. While we acknowledge the potential of ADM 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 ADM 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.