4 Agriculture - Products Stocks to Watch in a Thriving Industry

Industry Overview - The Zacks Agriculture - Products industry is expected to benefit from stable food demand driven by a growing global population, projected to reach 8.5 billion by 2030 and 9.7 billion by 2050, leading to a 50% increase in food demand [3] - The industry includes companies involved in storing, distributing, and farming agricultural products, as well as those providing hydroponic gardening solutions and innovative health products [2] Growth Drivers - Rising consumer awareness regarding food ingredients and a preference for healthier options are key factors driving industry expansion [1] - Innovative agricultural technologies, such as hydroponics and vertical farming, are anticipated to be significant growth catalysts due to their efficiency and sustainability [1][4] - The hydroponic equipment market is projected to exceed $16 billion by 2025, while the legal cannabis market in North America is expected to reach $57 billion by 2028 [4] Cost Management - Companies in the industry are facing rising costs related to labor, packaging, and distribution, but recent easing of feed prices is expected to help margins [5] - Efforts to improve supply chain issues and implement cost-reduction strategies are underway to sustain profitability [5] Market Performance - The Zacks Agriculture - Products industry has outperformed the Basic Materials sector but lagged behind the S&P 500 over the past 12 months, with an 11.8% increase compared to the S&P 500's 26.3% [8] - The industry currently has a trailing 12-month EV/EBITDA ratio of 4.50X, significantly lower than the S&P 500's 13.94X and the Basic Materials sector's 11.66X [9] Company Highlights - CalMaine Foods (CALM): Focused on expanding operational capacity and acquiring assets to enhance its geographic footprint, with a recent acquisition expected to boost egg prices due to supply concerns. Shares have gained 18.5% in the past six months [11][12] - West Fraser Timber Co. (WFG): Benefiting from strong demand in the home construction market, with shares up 5.6% in the past six months. The company is optimizing its portfolio and investing in modernization [13][14] - The Andersons, Inc. (ANDE): Strong cash flow supports growth in grain and fertilizer sectors, with shares gaining 21.5% in the last six months. The company is focused on renewables and improving ethanol production efficiency [15][16] - Hydrofarm (HYFM): Streamlining operations and expanding into non-cannabis applications, with shares up 9.4% in the last six months. The company is focused on improving margins through cost reductions [17][18]