"This past year, 40 countries faced food emergencies that required external assistance, with the crisis in Darfur being the most visible example," notes Glenn Rogers in an exceptional research effort on investing in the food and farming sector.
The contributing analyst for Internet Wealth Builder offers a basket of stocks involved in the food chain which he feels will help "fatten your portfolio" in coming years.
He notes, "There are a few things you will need to buy to begin growing food. First, you'll need a tractor to prepare the soil." For that, he turns to The Deere Company (NYSE: DE), a firm that has been manufacturing and distributing agricultural equipment worldwide since 1837.
He explains, "The stock has been on a tear this past year and has risen from the mid-$60s to $112. But the p/e ratio is still reasonable at 17.9 and I think the prospects for the company continue to be excellent."
After you've tilled the soil, he continues, the next thing you're going to need is some seed to plant. For that, he turns to Monsanto (NYSE: MON). Rogers explains, "Monsanto is much more than your average seed company in that they use biotechnology to develop the best sorts of seeds available in the world today."
He continues, "These advanced seeds produce more, are more resistant to disease, and will grow in harsher climates and soil conditions than was possible only a short time ago. Monsanto also produces pesticides for both the commercial and residential markets."
Rogers notes that the company has seen its share price rise from just under $40 to just under $60 over the past 52 weeks and cautions that it is "not inexpensive" with a p/e ratio of just under 40. Nevertheless, he says, "Monsanto is at the forefront of the seed industry and deserves a place in your portfolio."
Once you've got your seed planted, he states, the next thing you will require is some fertilizer. For this, he turns to Calgary-based Agrium (NYSE: AGU) was founded in 1931 and was formerly known as Cominco Fertilizers.
He explains, "The stock has risen almost 60% from last year, however if we are right that there is going to be a long-term need to produce more food this company should continue to benefit."
Finally, he states, after a harvest you need someone to process your product and take it to the market. For this, he suggests turning to Corn Products International (NYSE: CPO), which processes the products that farmers produce.
Founded in 1906 and headquartered in Illinois, he notes that the company also has great international exposure, selling throughout North and South America, Asia, and Africa. He adds, "The company announced first-quarter earnings that blew by estimates and they also boosted full-year earnings guidance."
Like all companies in this sector, he notes, the 52-week performance has been very impressive, moving from a low of $24.72 to the current price of $38.75. He says, "The forward p/e ratio is 17.17, which isn't too bad although it is not a screaming bargain."
Overall, he notes, this basket of stocks this group will benefit from our on-going need to eat and would be a good addition to "fatten" your portfolio.
For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free daily website, TheStockAdvisors.com.
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