Russia’s invasion of Ukraine has caused major disruption in commodity markets, and global supplies are tightening as a result. These countries have a pivotal role in wheat production, accounting for over one-quarter of global exports for the commodity. Moreover, the demand for food and biofuel surged post-pandemic, driving wheat prices to an all-time high. Hence, wheat stocks to buy represent excellent investment options at this time.
Wheat prices have cooled-off off recently since reaching an all-time high in March earlier this year. However, with Russia’s destabilizing presence in the market, prices are expected to remain high. Though the wheat market has taken a breather of late, the prices of most agricultural commodities are expected to surge well into next year. That said, here are three of the best wheat stocks to invest in to benefit from the potential shortages ahead.
Andersons (NASDAQ:ANDE) is a leading agribusiness boasting over a $1.25 billion market capitalization. It operates in the commodity merchandising, renewable fuels, and plant nutrient segments. Andersons benefits from strong margins and favorable industry trends, such as the increased demand for renewable fuels. Moreover, it boasts a diversified business model with exposure to different agricultural markets. Therefore, it’s well-positioned to benefit from favorable industry trends and is a compelling investment for long-term investors.
The firm’s late results have benefited from the conducive market conditions in the past several months. Its revenues have grown over 44% over the past year, well ahead of its five-year average of 36%. Moreover, it also offers a robust dividend, with 15 years of dividend growth. The firm remains in an excellent position to benefit from the bullish agriculture outlook as we advance.
MGP Ingredients (MGPI)
MGP Ingredients (NASDAQ:MGPI) has established its position as a top distilled spirits, branded spirits, and food ingredient solutions provider. It’s been of the most consistent businesses in its sector, boasting industry-leading margins and top-line growth. In addition to its strong financial position, MGPI has a long innovation history and a commitment to quality. Moreover, its robust premiumization strategy has helped deliver incredible branded growth for the business.
The strong market conditions of late have positioned it remarkably well to continue its tradition of delivering innovative and high-quality products to its customers. Its management recently raised its guidance for the year, pointing to a stellar upside ahead. Additionally, its management reported its full-steam ahead for the firm’s expansionary projects on the back of the strong results this year. Therefore, with secular tailwinds in place, I expect MGP to continue growing at an above-average pace for the foreseeable future. Hence, MGPI stock is a wise bet at current levels.
As a major processor of agricultural commodities, Bunge (NYSE:BG) is a key player in the global food chain. The company’s operations span the entire farm-to-consumer continuum, from sourcing and processing grains to marketing and distributing food products. The robust operating environment this year has helped Bunge produce spectacular results.
While Bunge’s cash and equivalents declined in 2021, its inventories jumped significantly. In a recent earnings conference call, management said they expect to release the cash invested in inventory as commodity prices moderate. It will be used to scale down its debt and improve its strategic positioning significantly. Moreover, BG stock trades at just 0.2 time’s forward sales, roughly 7.3% higher than its 5-year average. It is an excellent investment at current levels if you factor in its handsome dividend payout and superb cash flow growth.