2 Agriculture - Products Stocks to Buy From the Promising Industry

Core Insights - The Zacks Agriculture - Products industry is expected to benefit from stable food demand driven by population growth and consumer preferences for healthier options [1][4] - Innovative agricultural technologies like hydroponics and vertical farming are anticipated to be significant growth drivers for the industry [1][5] Industry Overview - The Zacks Agriculture - Products industry includes companies involved in storing agricultural commodities, distributing ingredients, and farming crops, livestock, and poultry products [3] - Companies in this sector also provide nutrients, advanced lighting systems, and accessories for hydroponic gardening, as well as innovative plant-based health products [3] Demand Trends - Global population is projected to reach 8.5 billion by 2030 and 9.7 billion by 2050, leading to a 50% increase in food demand [4] - Companies are investing in innovation to meet consumer demand for healthier food alternatives, enhancing product and market strategies [4] Technological Innovations - Hydroponics allows for controlled nutrient delivery and faster crop growth, making it popular in cannabis cultivation and vertical farming [5] - Vertical farming minimizes land and water usage, addressing environmental vulnerabilities and food production challenges [5] Cost Management - Industry players are facing rising costs in labor, packaging, and distribution, but have implemented cost-reduction actions to sustain margins [6] - Recent easing of feed prices may help companies engaged in animal products manage production costs [6] Industry Performance - The Zacks Agriculture - Products industry holds a Zacks Industry Rank of 99, placing it in the top 41% of 243 Zacks industries, indicating positive prospects [7][8] - Over the past 12 months, the industry has underperformed, with a decline of 11.9% compared to the S&P 500's increase of 17.9% [9] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 10.17X, significantly lower than the S&P 500's 18.51X and the Basic Materials sector's 14.62X [12] Company Highlights - Bunge Global S.A (BG): Recently completed a $34 billion merger with Viterra Ltd., enhancing its global agribusiness platform and expected to yield stable cash flows and synergies [14] - BG has a trailing four-quarter earnings surprise of 11.75% and a long-term estimated earnings growth of 5.13%, currently holding a Zacks Rank of 2 (Buy) [15] - GrowGeneration (GRWG): Reported a 15.4% sequential net sales growth in Q3 2025, returning to positive adjusted EBITDA and improving gross margins [21] - GRWG's proprietary brands are expected to contribute significantly to revenue growth, with a focus on acquiring profitable hydroponic garden centers [21][22]