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 Vital Farms Inc. (NASDAQ:VITL) 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 flock of pasture-raised chickens outdoors in their natural habitat.
Vital Farms Inc. (NASDAQ:VITL)
Number of Hedge Fund Holders: 28
Vital Farms Inc. (NASDAQ:VITL) is a food and agriculture company that specializes in producing ethically sourced eggs and dairy products. The company partners with family farms to offer a variety of products, including shell eggs, butter, hard-boiled eggs, and liquid whole eggs, which are available in over 24,000 stores across the United States.
In its third-quarter financial results for 2024, Vital Farms Inc. (NASDAQ:VITL) reported a remarkable 31.3% increase in net revenue, reaching $145 million compared to $110.4 million in the same quarter last year. This growth was primarily driven by higher sales volumes, reflecting strong consumer demand for its products. Vital Farms Inc. (NASDAQ:VITL) has managed to achieve a 31% increase in sales over the first nine months of 2024, showcasing its robust performance.
Looking forward, Vital Farms Inc. (NASDAQ:VITL) is focused on expanding its operations to support its ambitious goal of reaching $1 billion in net revenue by 2027. In June 2024, the company announced plans to open a new Egg Central Station (ECS) facility in Seymour, Indiana. This facility will enhance their egg washing and packing capabilities and build on the success of their existing operations.
Over the past three years, Vital Farms Inc. (NASDAQ:VITL) has demonstrated impressive growth, with a compound annual growth rate (CAGR) of 34% for revenue and an astonishing 111% CAGR for net income. Additionally, analysts are optimistic about the company’s future, holding a consensus buy rating on the stock and setting a one-year price target of $41.00, indicating a potential upside of 21% from current levels. With strong financial results and ongoing investments in capacity expansion, Vital Farms Inc. (NASDAQ:VITL) is well-positioned for future success, making it an attractive option for investors seeking opportunities in the farmland and agriculture sector.
Overall, VITL ranks 11th on our list of the best farmland and agriculture stocks to invest in according to hedge funds. While we acknowledge the potential of VITL 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 VITL 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.