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 CF Industries Holdings Inc. (NYSE:CF) 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 rustic farm field with a tractor spreadng nitrogen-based fertilizer in the background.
CF Industries Holdings Inc. (NYSE:CF)
Number of Hedge Fund Holders: 39
CF Industries Holdings Inc. (NYSE:CF) is an American producer of hydrogen and nitrogen products, primarily used in clean energy, emissions abatement, and agricultural fertilizers. The company manufactures and distributes essential fertilizers like ammonia, urea, and ammonium nitrate, which are crucial for enhancing crop yields.
For the first nine months of 2024, CF Industries Holdings Inc. (NYSE:CF) reported net earnings of $890 million or $4.86 per diluted share, down from $1.25 billion or $6.42 per diluted share in the same period of 2023. Despite this decline, the company produced approximately 7.2 million tons of gross ammonia, slightly up from 7.0 million tons in the previous year. This production increase reflects CF Industries Holdings Inc.’s (NYSE:CF) ability to maintain strong operational performance amid fluctuating market conditions.
Net sales for the first nine months of 2024 were $4.41 billion, a decrease from $5.06 billion in the same period of 2023. This drop was mainly due to lower average selling prices. However, sales volumes remained stable due to higher ammonia sales from a recently acquired Waggaman ammonia production facility.
The company is also investing in strategic initiatives aimed at sustainability and growth. Notably, CF Industries Holdings Inc. (NYSE:CF) is advancing projects related to low-carbon ammonia technologies and carbon capture at its facilities in Donaldsonville and Yazoo City. These initiatives not only align with global sustainability goals but also position CF Industries Holdings Inc. (NYSE:CF) as a leader in environmentally friendly solutions. Additionally, CF Industries Holdings Inc. (NYSE:CF) has been proactive in returning value to shareholders, repurchasing 14.4 million shares for $1.13 billion during the first nine months of 2024.
With its robust production capabilities, commitment to innovation, and focus on sustainability, CF Industries Holdings Inc. (NYSE:CF) presents a solid investment opportunity for those looking to invest in farmland and agriculture stocks.
Overall, CF ranks 3rd on our list of the best farmland and agriculture stocks to invest in according to hedge funds. While we acknowledge the potential of CF 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 CF 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.