Agriculture is a huge part of the American economy. Today, there are more than two million farms across the U.S. that contribute $1.26 trillion to U.S. gross domestic product (GDP), a 5.4% share. Additionally, 10% of American workers are employed directly or indirectly in the agriculture sector, with more than 2.5 million people working directly on farms. The top three U.S. farm products are cattle, corn and soybeans.
And America is one of the biggest exporters of agriculture products in the world, sending nearly $150 billion worth of food and other ag products to other countries, far more than is imported, creating a positive agriculture trade balance for the nation. Given its importance to the economy, it should come as no surprise that there are dozens of public agriculture companies available to invest in, many of which offer great returns.
Let’s explore three of the best agriculture stocks to buy this month.
Federal Agricultural Mortgage Corp. (AGM)
Popularly known as “Farmer Mac,” the Federal Agricultural Mortgage Corp. (NYSE:AGM) specializes in agriculture loans such as mortgages for farms and houses situated in rural areas.
Created by an Act of Congress in 1988 during a U.S. agriculture crisis, five of the 15 members of Farmer Mac’s board of directors are appointed directly by the U.S. president. The company has traditionally offered loans with lower interest rates than are found with most commercial banks.
Additionally, Farmer Mac takes on far less interest-rate risk than most other banks, making it a stable company. Its services are viewed as essential within the U.S. agriculture sector. AGM stock is fairly small with just a $2 billion market capitalization. However, it has proven to be a solid investment, rising 48% in the last 12 months and 165% through five years. Despite the bull run, AGM stock trades at only 12 times future earnings estimates. And the stock pays a quarterly dividend of $1.10 per share for a yield of 2.31%.
Cal-Maine Foods (CALM)
Each year, Cal-Maine produces more than three billion eggs, making it the largest producer in the U.S. The company’s financial results and stock took a hit in 2023 as egg prices slumped. But reports now say that egg prices are again on the rise due to an outbreak of bird flu that is roiling the American industry.
The latest inflation report in the U.S. showed that egg prices rose 8.9% in December from November. The sharp monthly increase in egg prices was well above the overall monthly growth in inflation of 0.3%. According to the U.S. Department of Agriculture (USDA), the average cost of a dozen eggs in America was $4.82 a year ago. However, that price fell to $2.04 by last August. But now, price are marching higher once again. This could lead to a turnaround in CALM stock in the coming months.
In the last 12 months, CALM stock has declined 2%. Cal-Maine’s shares are currently trading at a rock bottom price-earnings (P/E) ratio of five. It offers a quarterly dividend of 77 cents per share, giving it a yield of 5.58%.
In fact, sugar’s price is now at its highest level since 2011, pushed upwards by extreme weather that has decimated global crops of sugar cane. Specifically, extreme droughts in India and Thailand are threatening sugar cane crops and pushing prices upwards. The price of sugar has risen nearly 15% so far in 2024.
According to the USDA, American consumers saw prices for sugar and sweets rise by 8.9% in 2023. The government agency forecasts another 5.6% increase this year. Sugar’s all-time high was reached back in November 1974 when it traded at $65 per pound. For Cosan, the rise in prices is likely to boost the company’s earnings in the coming year. Therefore, now it’s advantageous for investors to take a position in CSAN stock. Over the last 12 months, Cosan’s stock has gained 14%.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.