A diverse retirement portfolio should contain stocks from a number of different sectors. With America in the throes of unpredictable spring weather, now is the perfect time to consider agricultural stocks. Not just because it’s the beginning of the seasonal growing period, but also because agriculture is one of the most diverse sectors. One good reason to consider agricultural stocks is because the sector is booming, especially exports.
Between fiscal 2009 and 2012, U.S. agricultural exports increased 41% to $135.8 billion. Going forward, world trade growth is expected to climb to between four and five percent in 2013. Europe’s recession and Japan’s economic slowdown will be major factors preventing more rapid growth in 2013. At the same time, the U.S., Asian, and Latin American economies are expected to drive higher growth in 2013. (Source: “Latest U.S. Agricultural Trade Data,” United States Department of Agriculture web site, May 2, 2013, last accessed May 16, 2013.)
And 2013 is shaping up to be a record year for U.S. agriculture. Year-to-date, U.S. agricultural exports are up 10.9% at $79.2 billion versus the same period in 2012. Thanks to overall world macroeconomics, fiscal 2013 U.S. agricultural exports are forecast at a record $142 billion. (Source: “Outlook for U.S. Agricultural Trade – FY 2013 Exports Forecast at a Record $142 Billion; Imports at a Record $112.5 Billion,” United States Department of Agriculture, Cornell University Library web site, February 21, 2013, last accessed May 16, 2013.)
As one of the most diverse sectors, where should investors interested in U.S. agricultural stocks turn? The agricultural sector contains the more obvious, traditional operations—those that grow crops and raise … Read More
Farmers really are the best customers.
Monsanto Company (NYSE/MON) has become more than a 10-bagger since listing on the stock market. Its performance over the last year has been good, and the company just beat the Street with its quarterly earnings results.
I suspect that many farmers have a kind of love/hate relationship with Monsanto. The company’s “Roundup Ready” products work, but it’s the way the company has litigated some farmers that has probably turned off a number of customers.
The company’s earnings results were good. Revenues in its latest quarter grew 15% to $5.5 billion. Global corn sales were particularly strong. Earnings came in at $1.5 billion, up 22% from comparable earnings of $1.2 billion.
Monsanto’s 10-year stock market performance has been outstanding, and I think investors can attribute a lot of weight to this—especially those who might be considering investments related to agriculture. Monsanto’s stock chart is featured below:
Chart courtesy of www.StockCharts.com
Wall Street has been consistently increasing Monsanto’s fiscal 2013 and fiscal 2014 earnings estimates.
Imagine this business if you have the loyalty of a farmer. The vast majority of farmers are in business for the very long term. They’re not going away tomorrow.
Barriers to entry are high because of seed development and the years it takes to develop proprietary technologies.
Monsanto is in a very good position right now, as the commodity price cycle favors agriculture. The prospect for continued strength in both revenues and earnings growth this year is very good, as the U.S. corn crop should reach an all-time record high.
Monsanto’s stock market performance has been pretty darn solid, especially considering … Read More
Two big trends are about to collide: global warming and global re-inflation. And the result is going to create a lot of shocks and opportunity. I’ve heard people refer to the recent tsunamis, rising temperatures, floods, and droughts as the “weather apocalypse.” Whatever you call it, the re-inflation in prices combined with global warming is going to create a new super cycle in agriculture and agribusiness.
The business cycle is changing in financial markets. Currencies are being devalued. The bull market in bonds is over. Central banks are repatriating their gold. There’s massive monetary stimulus, and now there are rising prices, which should help boost earnings initially. The stock market could go a lot higher this year.
The re-inflation cycle has staying power, even through the next U.S. recession. An inflationary business cycle, product scarcity, increasing demand, and the weather represent a fundamental, long-term uptrend for agriculture—the final leg of the commodity price cycle.
The stock market’s recent breakout was very powerful. Wall Street is now ahead of first-quarter earnings season. Before the next big crash, I think the stock market will have one final push higher—a lot higher than current levels.
I absolutely agree with Jim Rogers’ view about agriculture. But hey, even Jim has something to sell you. The re-inflation definitely has consequences, but global monetary stimulus is on a tear. And as an investor, it doesn’t pay to fight it.
The stock market is holding firm ahead of first-quarter earnings season. Its performance is very similar to the strength experienced during the first four months of last year. “Sell in May, and go away?” I think it’s … Read More
When the stock market experiences its next major pullback, it should be an attractive entry point to consider select large-caps that pay dividends. On the cusp of another earnings season, most large U.S. corporations are in excellent financial health.
There are a number of investment themes playing out in the current business cycle. When gold prices were lofty, stocks like Caterpillar Inc. (NYSE/CAT) and Joy Global Inc. (NYSE/JOY) were really doing well.
Stock markets in China, the world’s second-largest economy, have been drifting for several years, but emerging markets, like the Philippines and Malaysia, are growing like mad. And Japan’s stock market recently turned significantly higher. Many Japanese companies are expecting strong revenue gains this year on the back of a weaker yen.
The ebb and flow of the global business cycle is always changing; and with inflation creeping into the U.S. economy, the next big play will be in real assets, as the commodity price cycle makes its final migration into the agriculture sector.
Deere & Company (NYSE/DE) has the biggest market share of any large equipment manufacturer related to agriculture in the U.S. Currently, the stock is not expensively priced, with a price-to-earnings (P/E) ratio around 11.5. Deere’s stock chart is featured below:
Chart courtesy of www.StockCharts.com
On the stock market, Deere has proven to be cyclical and a very good long-term wealth creator for shareholders. Since 1963, the company has split its stock two-for-one on four occasions, the last one being in November 2007. Deere also split its stock three-for-one in November 2005, and the company has been increasing its annual dividends consistently for the last 10 … Read More