With the rapidly growing population worldwide and the evolution of innovative technologies, the agriculture industry is expected to experience robust growth in the upcoming years. Agricultural development is one of the most powerful tools to eradicate extreme poverty, foster shared prosperity, and feed an estimated population of 10 billion by 2050.
Given this backdrop, let’s take a close look at fundamentally strong agriculture stocks Nutrien Ltd. (NTR), ICL Group Ltd (ICL), and Dole plc (DOLE), cultivating buy opportunities.
The agriculture market has transformed significantly in recent years with an enhanced focus on vertical farming, plant breeding, precision farming, smart irrigation, and technological innovation. Moreover, a surging demand for sustainable and carbon-neutral agriculture continues to propel the industry’s expansion.
According to a report published by MarketsandMarkets, the global agriculture market is expected to grow from $81.50 billion in 2023 to $94.30 billion by 2024 at a year-over-year increase of 15.7%.
Moreover, the increasing automation of commercial greenhouses and the implementation of controlled environment agriculture are driving the growth of the smart agriculture industry. Technologies like AI, IoT, machine learning, and robots create promising market growth opportunities. The U.S. smart agriculture market will grow at a CAGR of 10.4% from 2024 to 2030.
Besides, the AI market in the agriculture industry is expected to grow to $5.76 billion by 2029, expanding at a CAGR of 22.5% during the forecast period (2024-2029). Innovations influencing this growth include driverless tractors, which can steer automatically using GPS-based technology, and maximized crop yield using AI/machine learning techniques.
Considering the encouraging economic trends, let’s delve into the fundamentals of the top three Agriculture stocks, beginning with the third choice.
Stock #3: Nutrien Ltd. (NTR)
Headquartered in Saskatoon, Canada, NTR provides crop inputs and services. The company operates through four segments: Retail; Potash; Nitrogen; and Phosphate. It distributes crop nutrients, crop protection products, seeds, and merchandise products and offers granular and standard potash products.
On May 8, NTR’s Board of Directors declared a quarterly dividend of $0.54 per share payable on July 19, 2024, to shareholders of record on June 28, 2024.
NTR pays an annual dividend of $2.16, which translates to a yield of 3.87% at the current share price. Its four-year average dividend yield is 3.18%. Moreover, the company’s dividend payouts have increased at a CAGR of 5.6% over the past three years. NTR has raised its dividends for five consecutive years.
In terms of forward EV/EBITDA, NTR is trading at 7.30x, 14.7% lower than the industry average of 8.56x. Likewise, the stock’s forward Price/Sales multiple of 1.03 is 23% lower than the 1.34 industry average. Also, its forward EV/Sales of 1.52x is considerably lower than the industry average of 1.70x.
During the first quarter that ended March 31, 2024, NTR reported sales of $5.39 billion. Its net earnings were $165 million, or $0.32 per share, respectively. In addition, the company’s adjusted EBITDA came in at $1.05 billion for the quarter. As of March 31, 2024, its cash and cash equivalents were $496 million.
The company expects retail adjusted EBITDA between $1.65 billion and $1.85 billion for the full year.
Analysts expect NTR’s revenue and EPS for the third quarter (ending September 2024) to grow 1% and 68.1% year-over-year to $5.42 billion and $0.59, respectively. For the fiscal year 2025, the company’s revenue is expected to increase 2.6% year-over-year to $27.47 billion, while its EPS is expected to grow 8.6% year-over-year to $4.26.
Shares of NTR have surged 4.4% over the past month and 4.6% over the past six months to close the last trading session at $55.87.
NTR’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
NTR has a B grade for Growth. It is ranked #4 out of 27 stocks in the Agriculture industry.
In addition to the POWR Ratings we’ve stated above, we also have NTR ratings for Momentum, Stability, Quality, Value, and Sentiment. Get all NTR ratings here.
Stock #2: ICL Group Ltd (ICL)
Headquartered in Tel Aviv, Israel, ICL operates as a specialty minerals and chemicals company globally. It operates through Industrial Products; Potash; Phosphate Solutions; and Growing Solutions segments. It produces bromine out of a solution that is a by-product of the potash production process and bromine-based compounds.
On February 28, ICL acquired Nitro 1000, a manufacturer, developer, and provider of biologicals in Brazil, for nearly $30 million, which marked a substantial step into the biologicals market, and expanded ICL’s product offerings and positioned it for further expansions into new and adjacent end-markets.
In terms of forward non-GAAP P/E, ICL is trading at 12.88x, 19.3% lower than the industry average of 15.96x. Also, the stock’s forward EV/Sales multiple of 1.18 is 30.9% lower than the 1.70 industry average. Likewise, its forward Price/Cash Flow of 5.44x is 42% lower than the industry average of 9.38x.
For the first quarter that ended March 31, 2024, ICL’s sales increased 2.7% from the prior quarter to $1.73 billion, and its operating income grew 36.2% quarter-on-quarter to $203 million. Its adjusted EBITDA increased 1.4% from the previous quarter to $362 million.
Furthermore, net income attributable to shareholders and EPS were $109 million and $0.09, up 62.7% and 50% from the prior quarter, respectively
Analysts expect ICL’s revenue for the fiscal year (ending December 2025) to increase 6.3% year-over-year to $7.40 billion, and its EPS for the same period is expected to grow 26.8% year-over-year to $0.45. Also, the company topped the consensus EPS estimates in all four trailing quarters, which is impressive.
ICL’s stock has plunged 5.6% over the past month to close the last trading session at $4.61.
ICL’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has an A grade for Value. It also has a B grade for Stability, Quality, and Sentiment. ICL is ranked #2 among 27 stocks in the Agriculture industry.
Click here to access ICL’s ratings for Growth and Momentum.
Stock #1: Dole plc (DOLE)
Based in Dublin, Ireland, DOLE engages in sourcing, processing, marketing, and distribution of fresh fruit and vegetables worldwide. It operates through three segments: Fresh Fruit; Diversified Fresh Produce - EMEA; and Diversified Fresh Produce - Americas and ROW.
On May 14, DOLE’s Board of Directors declared a cash dividend for the first quarter of 2024 of $0.08 per share, payable on July 5, 2024, to shareholders of record on June 12, 2024. DOLE pays an annual dividend of $0.32, which translates to a yield of 2.63% at the current share price. Its four-year average dividend yield is 2.13%.
In terms of forward EV/Sales, DOLE is trading at 0.29x, 81.7% lower than the industry average of 1.61x. Also, the stock’s forward EV/EBITDA multiple of 6.41 is 40.4% lower than the 10.77 industry average. Further, its forward Price/Sales of 0.14x is considerably lower than the industry average of 1.21x.
DOLE’s net revenues increased 6.6% year-over-year to $2.12 billion during the first quarter that ended March 31, 2024. Its non-GAAP gross profit rose 8.1% year-over-year to $192.76 million. The company’s operating income of $112.13 million indicates growth of 80.5% from the year-ago value.
Furthermore, the company’s adjusted net income and EPS came in at $40.55 million and $0.43, up 25.6% and 26.5% from the prior year’s quarter, respectively. Its adjusted EBITDA rose 9.7% from the year-ago value to $110.10 million.
Street expects DOLE’s revenue for the fiscal year (ending December 2025) to increase marginally year-over-year to $8.16 billion. Similarly, the company’s EPS is expected to grow 17.9% year-over-year to $1.37 for the following year. Furthermore, DOLE has surpassed the consensus EPS estimates in each of the trailing four quarters.
DOLE’s stock has gained 3% over the past six months and 5.8% over the past nine months to close the last trading session at $12.19.
DOLE’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Value and a B for Quality and Stability. Within the same industry, DOLE has topped among the 27 stocks.
Click here to access additional ratings of DOLE for Sentiment, Growth, and Momentum.
What To Do Next?
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NTR shares were trading at $55.22 per share on Friday morning, down $0.65 (-1.16%). Year-to-date, NTR has gained 0.06%, versus a 12.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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