A fast approach to get broad publicity to the agricultural sector is thru the iShares World Agriculture Index ETF, which works by the aptly named ticker image of COW and trades on the TSX. Buyers in COW are immediately diversified throughout 36 firms, largely primarily based within the U.S., with a smattering from Italy, Canada and Israel. The most important holdings embody Archer Daniels Midland, Mosaic, Corteva, Bunge and John Deere.
Right here’s a breakdown of subsector weightings:
Supply: Blackrock.com
Items of COW have already realized a 20% acquire within the final month, so future revenue alternatives have been “baked in” to some extent, however with an total P/E ratio of 14.27, it nonetheless seems conservatively valued in comparison with bubblier markets. COW’s returns during the last yr and three years, of 34% and 26% respectively, present a beneficial longer-term development line.
In the event you’re in search of a pure-Canadian single-stock strategy to the state of affairs, Saskatchewan-based Nutrien (NTR) occurs to be the world’s largest potash producer. And it’s integral to the worldwide fertilizer provide chain. Collectively, Russia and Belarus account for 37.6% of the world’s potash manufacturing. Whereas analysts can’t make sure how a lot of Belarus’ and Russia’s capability can be hampered by conflict, tariffs and sanctions, there is no such thing as a doubt that many potash patrons can be in search of a extra steady provider within the quick future.
As with our favorite bovine ETF, nevertheless, the query shortly turns into: “Has a best-case state of affairs for Nutrien already been priced in?”
Steven Hansen, managing director and fairness analyst at Raymond James, believes there would possibly nonetheless be some meat on the bone with regards to future returns. Listed here are 4 quotes from him, by way of Bloomberg:
“They do have a considerable amount of idle potash capability they may convey to market that they haven’t completed but. The factor is, it should require them to rent a bunch extra folks and get some new tools.”
“[Nutrien is], actually, the one participant that has idle or extra capability nonetheless obtainable globally. So they may play a very vital function in, I’ll say, backfilling with the availability that’s been taken out of the market within the jap hemisphere.”