Since the start of the war in Ukraine two years ago, the importance of food security has never been clearer. The interconnected nature of food production worldwide has made agriculture a cornerstone of the global economy. As such, many of the once locally-based agriculture companies have become lucrative stock options in the international markets.
Yet, with this expansive success, several emerging challenges, such as increasing crop blights and loss of topsoil, must be addressed. This means the companies currently producing innovative solutions for farming hurdles will profit as the global demand for food increases. Thus, for investors looking to maximize profits from agritech, the critical focus will be on productivity in the coming decades.
Therefore, novel products such as sustainable fertilizers and improved pesticides could prove to be the future of global farming. Here are three agritech stocks to watch as farming becomes increasingly complex for feeding a developing population worldwide.
Yara International (YARIY)
Dedicated to carbon neutrality by 2050, Yara International (OTCMKTS:YARIY) is among the most vocal agritech companies for achieving sustainability. Part of Yara’s commitment to sustainability includes minimizing waste and maximizing efficiency. The company intends to achieve this by reducing water and energy consumption as well as pollutant emissions.
Such an approach will initially result in short-term costs for Yara’s production but a decrease in the long term. Furthermore, Yara’s investments also promote limited use of fertilizers that damage soil integrity in order to preserve farmland. This, in turn, will likely bode well for Yara’s future relationship with agriculture regulators.
As governments begin to address decreased soil productivity, companies like Yara could be at the forefront of a newly sustainable industry. Bearing this in mind, investors looking to profit from agritech stocks should consider Yara, thanks to its future-focused approach.
Nutrien Ltd. (NTR)
A giant in the fertilizer industry, Nutrien’s (TSE:NTR) diversification in soil enhancers has resulted in a global presence. Its products are used across the globe on nearly every continent to maximize crop yield, thanks to patented chemical technologies. Thus, Nutrien products support nearly every time of farm type and cultivar, from big to small, from legumes to fruits.
Nutrien also maximizes company growth by selling directly to farmers through the use of integrated community networks. This cuts out the middlemen and distributors from Nutrien’s sales, thus increasing profits while keeping consumer costs low. Due to this approach, Nutrien’s products continue to be ubiquitous across global farming processes.
With such a community-focused approach, Nutrien maintains a net profit margin of 4%, even among increasingly complex supply chains. These factors result in a stable option among agritech stocks and a moderate buy rating per analysts.
FMC Corporation (FMC)
Some agritech stocks, like FMC Corporation (NYSE:FMC), don’t solely rely on agricultural outcomes for financial performance and increasing revenues. For FMC, its business model aligns more with a chemical company than a traditional farming company. This means the company has a wide array of industry experience in preparing for the changing future of farming.
Moreover, FMC’s expertise in agricultural, lithium, and medical research has enabled it to create hybrid products like fungicides for farming. This makes FMC incredibly unique, as other agricultural pesticide companies steer clear of the significant cost associated with anti-fungal chemicals. For most companies, the high resistance and adaptability of fungi make them non-profitable to develop products against. This is because the product must constantly change to match the fungal blight’s adaptations.
Yet FMC has carved out a niche in specialized pesticides and herbicides thanks to its depth of knowledge and research. This approach provides investors with a chance to invest in one of the most successful agritech stocks on the market.
On the date of publication, Viktor Zarev 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.
