Checking In With Different Pieces of the Agriculture Sector
This week we're checking in with the agriculture sector. As we go through the specialties of our three candidates we also see impact from the cannabis and artificial intelligence industries. Let's check in with the each of our Alpha candidates for the week.
This week we’re taking a look at the agriculture sector. The agriculture sector covers a broad range of companies. We’ve got companies that grow wheat, corn, soy and other crops. But we’ve also got all the products that go into the cultivation and production of these crops.
Last Tuesday, we took a moment to discuss how the FDA is taking the month of May to gather information about CBD and cannabis. If the FDA clears up some of the red tape and the legalization of cannabis continues moving forward, fertilizer and hydroponic suppliers will see a whole new realm of consumers start to appear.
Our Alpha candidates are in all different areas of the agriculture sector. Let’s jump right in…
First up, we’ve got Archer-Daniels-Midland Company (ADM). Archer-Daniels-Midland is a world-leader in the production of soy meal and oil, corn for ethanol, sweeteners and wheat. Its been transforming crops into consumer products for over a century.
Its revenue comes from a combination of production & processing, transportation and nutrition services. Amongst its portfolio of different crops, ADM has one of the world’s most diversified oilseeds business. It has over 50 different products including meals and oils used in food, animal feeds, renewable fuels and industrial products. Its carbohydrate solutions division boasts that ADM is the world’s largest corn processor.
The company also has a massive transportation division. With 1,400 semi trailers, 28,000 railcars, 2,300 barges, ADM ships over 160,000 ocean containers annually. On top of all that, the company also has a broad nutrition portfolio of ingredients addressing nutrition, function, texture and taste. This is an extension of its customer resources.
Last week shares opened at $42.38 and closed at $43.69. That’s a gain of 3% over last week. Let’s see if it can keep up that momentum in the upcoming week.
Next up, we’ve got Scotts Miracle-Gro Company (SMG). Scotts Miracle-Gro has been in the business of growing great things since 1868. The company evolved from a family general store to the leader in lawn and garden and hydroponic growing products.
The company prides itself in its vast portfolio of brands. It includes all the brands that you need for any and all gardening and hydroponic needs. It’s the clear leader in the lawn and garden industry that can be found in any major retailer. And now the company is leveraging its Hawthorne brand to continue growth in the hydroponic industry. In just January and February sales improved 10% for US hydroponics.
With the continued legalization of cannabis, fertilizer and hydroponic suppliers are going to see a piece of the action.
Last week shares opened at $84.25 and closed on Friday at $92.86. This jump was due to the strong earnings release that happened on Wednesday. We’ll check in with all those details during our mid-week update.
Finally, we’ve got The Mosaic Company (MOS). The Mosaic Company is the world’s leading producer and marketer of concentrated phosphate and potash. Phosphate and potash are both used to produce fertilizers. They both provide specific functions in supporting plant growth.
The Mosaic Company works carefully to maximize efficiencies and minimize energy and natural resources in the energy-intensive process of mining and processing potash and phosphate. Its mines and production facilities in North and South America produce concentrated phosphate crop nutrients and phosphate-based animal feed ingredients.
The company has a strategic financial strategy to strengthen the business and return money back to shareholders. The company pays a dividend and share repurchase plan.
The company is using technology and artificial intelligence to improve costs and efficiency. The company’s investor presentations all feature a picture of an employee with his joystick and three computer monitors. The caption explains that he’s in the remote mine pit operations center. These integrated remote operations centers use advanced and predictive analytics to lower costs and improve efficiency.
Last week shares opened at $26.09 and closed on Friday at $25.62.
We’ll be back on Wednesday to check in and break down each company’s financials.
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