4 Agriculture Operations Stocks to Watch as Trade Uncertainties Weigh

Industry Overview - The Zacks Agriculture – Operations industry is experiencing persistent challenges such as volatile commodity prices, rising input costs, trade uncertainties, and increasing operational expenses, which are squeezing margins and disrupting productivity [1][6][10] - The industry includes companies involved in the production, transportation, storage, processing, and distribution of agricultural commodities, as well as those engaged in dairy operations and food ingredient development [3] Future Growth Factors - The U.S. Department of Agriculture projects agricultural exports to reach $173 billion for fiscal 2025, driven by stronger grain and feed exports, particularly corn, which is expected to increase by $1.2 billion [4] - The industry is benefiting from rising consumer demand for healthier food options, leading to a shift towards organic farming practices and innovations in food processing and grain-handling techniques [5] Cost Pressures - Agricultural companies are facing elevated costs due to fluctuating commodity prices and inflation-driven input increases, which are narrowing profit margins [6][7] - Companies are managing higher selling, general, and administrative (SG&A) expenses, which may continue to impact profitability [7] Industry Performance - The Zacks Agriculture – Operations industry ranks 158, placing it in the bottom 36% of over 250 Zacks industries, indicating dull near-term prospects [8][9] - Over the past year, the industry has underperformed compared to the Zacks Consumer Staples sector and the S&P 500, with a collective decline of 8% [11] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 13.21X, significantly lower than the S&P 500's 23.36X and the sector's 16.51X [14] Notable Companies - Corteva Inc. (CTVA): Positioned for above-market growth with a strong product pipeline and innovation focus, expected to see 2025 earnings growth of 23.7% [17][18] - Mission Produce Inc. (AVO): Engaged in sourcing and distributing avocados and other fruits, with a projected earnings growth of 12.1% for fiscal 2025 [20][22] - Archer Daniels Midland Company (ADM): Focused on nutrition and sustainable materials, with a stable performance in its Nutrition segment, but facing declines in overall earnings [25][26] - Dole plc (DOLE): A leader in fresh produce, benefiting from improved logistical efficiencies, though projected earnings for 2025 suggest a decline of 18.9% [29][30]