During an economic downturn, every investor looks for a defensive investment, which can help in fighting with the crisis and provide a level of protection to the portfolio. As the market players are aware, the Australian economy is currently experiencing growing uncertainty due to the COVID-19 pandemic, which rose from China and has now spread to the entire globe. Investors are withdrawing their money from the markets because of the increasing impact of infectious disease.
In the current scenario, investment in the agricultural sector can be beneficial as this is a defensive sector and plays a significant role in times of uncertainties in the markets. There is a saying that Individuals can leave anything but cannot leave food or essential goods. Thereâs been news that us spreading around the world, highlighting that the increasing fear of pandemic has led the consumers stockpile essential goods.
While investing in the agricultural sector, an investor should look for key attributes such as a robust product and a high-end brand value. To understand this further, we will look at some of the agricultural and food supply companies that possess these essential attributes:
Bega Cheese Limited (ASX:BGA)
Bega Cheese Limited is engaged in the processing, manufacturing, cutting and packaging traditional cheese products. The company also produces other high-value dairy products.
Reduced Milk Supply Impacted Underlying Earnings
Bega Cheese recently released its results for the first half of the financial year 2020 and outlined the following:
In another update, the company announced that Perpetual Limited and its related bodies corporate have made a change to their substantial holdings in the company on 27 March 2020 and the current voting power remains at 11.10% as compared to the previous voting power of 12.15%.
The company is in regular discussions with domestic and international suppliers and customers concerning the potential impact of COVID-19 on its business and their partnersâ businesses.
The stock of BGA closed the dayâs trading session at $4.700 per share on 02 April 2020, indicating a rise of 0.642% against its previous closing price. The market capitalisation of Bega stood at $1.00 billion while the total outstanding shares were 214.24 million. During last three months and six months, the stock of BGA has provided shareholders with returns of 8.10% and -2.51% respectively.
Tassal Group Limited (ASX:TGR)
Tassal Group Limited is involved in the farming of Tiger Prawns and Atlantic Salmon. The Group also processes and distributes salmon, prawns and other seafood.
Strategy to drive future earnings growth
During 1H FY20, the companyâs strategy was to place the business to drive growth in earnings & returns in FY20 and beyond.
In order to please the shareholders, TGA paid interim dividend amounting to 9 cents per share (25% franked) on 31 March 2020.
The stock of TGR closed the dayâs trading session at $3.670 per share on 02 April 2020, indicating a rise of 1.944% against its previous closing price. The market capitalisation of Tassal Group stood at $746.55 million while the total outstanding shares were 207.37 million. During last three months and six months, the stock of TGR has provided shareholders with returns of -13.67% and -15.29% respectively.
Bio-Gene Technology Limited (ASX:BGT)
Bio-Gene Technology Limited is involved in the development and commercialisation of insecticide products. It officially got listed on the ASX in 2017.
Store Grain Trial Results
When it comes to financial position, the company managed to retain strong a cash position of $3.5 million as on 18 March 2020. Also, its CEOâs visit to the US has resulted in positive discussions with current and potential commercialisation partners. So far, the company has not experienced any impact on its business processes or commercialisation strategies from the arising fear of COVID-19.
During 1H FY20, the company also continued its engagement with several other international companies, many of which have received samples of Flavocide and QcideTM under MTA's, with which they will undertake their own testing.
The stock of BGT closed the dayâs trading session at $0.150 per share on 02 April 2020, in line compared to the previous closing price. The market capitalisation of Bio-Gene stood at $19.93 million while the total outstanding shares were 132.86 million. During last three months and six months, the stock of BGT has provided shareholders with returns of -26.83% and -11.76% respectively.
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