| | | I have always done well w/ AG companies as it is a large industry sector. Farmers tend to buy new equipment after a good harvest so it pays to monitor companies inside the sector to see if this is a trend. CAT had good earnings this last week. CTVA w/ great earnings too (farmers buying more seed and may actually be planting more acres this season).
You made an excellent pick on MTW in 2022 as they benefited w/ this trend (they sell into the AG sector) and/or it was just good timing as they had previous bad quarters and were sold off to multi year lows.
There are many different players in the AG sector large and small. In the small cap sector they tend to benefit more than the large cap AG companies if you can buy them at the right price.
I own CTVA the spin off from DOW and SANW (a micro cap seed developer). SANW near all time lows but if you dig deep, you will find they have ties to CTVA. Not only is CTVA their largest customer but CTVA is on their board.
TITN a small cap (a better buy in the teens). I have owned this off & on and have built a nice position (over last few months) ready for the next up swing in the harvest cycle. They are a distributor of farm machinery and make money also selling trade in machinery. When farmers buy new equipment, TITN will get the trade in equipment and sell it to other farmers.
TWI a new position but another one I have owned off & on over the decade. They specialize in selling large equipment tires including tractor tires. They will come out to farms, install tires as well as sell to distributors & manufactures. Business typically does better during positive harvests when farmers tend to buy new tires for their tractors.
Ag Growth Inc Fd(AGGZF) is another one I have been peeling off shares but like to buy under $20. If you need grain bins your talk to Ag Growth (worldwide too). Big w/ wheat grain bins especially in Russia & Canada. You hit this one at the right entry price and the harvest goes well, you see those grain bin orders come in.
CNHI, AGCO, CAT & DE - these are the tractor manufactures. DE still too expensive but the leader. I built nice positions in CNHI & AGCO w/ CNHI as perhaps the unknow 4th runner up ($16.8 Billion market cap). If we get a good harvest this Spring, keep your eye on AGCO & CNHI.
Finally my wildcard and potential 4 bagger is Phibro Anl Htlh A(PAHC). I sold my last shares in 2022 at/near $22.
Phibro Animal Health Corporation is a leading global diversified animal health and mineral nutrition company. The company provides a broad range of products for food animals including poultry, swine, beef and dairy cattle and aquaculture. In addition to animal health and mineral nutrition products, Phibro manufactures and markets specific ingredients for use in the personal care, automotive, industrial chemical and chemical catalyst industries. Currently, Phibro focuses on regions where the majority of livestock production is consolidated in large commercial farms such as the U.S., Brazil, China, Russia, Mexico, Australia, Turkey, Israel, Canada and Europe. I built a nice position last few months w/ an avg cost around 10.25/share. I probably should add even more shares but I like creating a diversified basket of these different AG names. Here you get a 9.5x PE, 4.5% div selling below it's SMA(200) weekly & SMA(200) daily. Debt still relatively high at 1.77x Debt/Equity. Their AG business generates good profits if/when commodity prices are high.
Finally a new position for me is Adecoagro S.A.(AGRO). Selling near it's all time high so just position is small (a tracking position) as I would love to load up at/near $5 on any significant sell off. PE 6.4x, 3% div little debt. It's all about the harvest which is weather dependent in the regions they farm in (Argentina, Brazil and Uruguay). They rent & own land and have exposure to the $US so profits are less in $US if/when the $US is strong (like today). However, if the $US falls, their profits are higher. Years past have had issues w/ drought and this year mild flooding in Brazil.
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I like the AG sector as we all need food, benefits the world (not like blowing things up) and new technologies can help increase harvest. As a side note, even AI is working to make farming more efficient. INTC is working w/ small farmers in India to help monitor farm & crop production and help in fertilizer/water applications remotely.
Just some ideas to follow. Not takeover candidate but buying into a 'theme' w/ a good entry point and waiting 12 months to see how it plays out. |
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