5 Canadian agriculture stocks to watch closely: NTR to AFN

September 04, 2022 05:05 AM EDT | By Kajal Jain
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  • Canada’s wheat production is reportedly anticipated to rise by 55.1 per cent year-over-year to 34.6 million tonnes in 2022
  • Statistics Canada said that canola production is expected to climb 41.7 per cent this year compared to 2021
  • Verde stock galloped by roughly 498 per cent in 12 months

Canadians can explore agriculture stocks like Nutrien (TSX: NTR), Verde Agritech (TSX: NPK), Ceres Global (TSX: CRP) etc., in the light of Statistics Canada's crop field estimates report, published on August 29. The national data agency revealed that Canadian farmers are expected to see increased crop production in 2022, largely helped by better growing conditions as per the latest yield model estimates based on satellite imagery technology and agroclimatic data.

StatsCan stated that Canada's wheat production is anticipated to rise by 55.1 per cent year-over-year (YoY) to 34.6 million tonnes this year. Further, in 2022, national canola production is expected to climb 41.7 per cent to 19.5 million tonnes compared to the prior year. Whereas corn for grain production is projected to expand by six percent, soybean production is expected to reach 6.4 million tonnes this year, up by 1.8 percent YoY.

Hence, Kalkine Media has picked the following six agri stocks that one can explore, keeping in mind these projections.

1.     Nutrien Ltd (TSX: NTR)

Nutrien is among the country's top agriculture companies that offer agricultural solutions, including crop nutrients and protection. The large-cap fertilizer retailer saw top-line growth of 49 per cent to US$ 14.5 billion in the second quarter of 2022 relative to US$ 9.76 billion recorded in the same period last year.

The company's profitability significantly rose as its net income rose to US$ 3.6 billion in the latest quarter, reflecting a positive change of 224 per cent from Q2 2021.

In addition, Nutrien will distribute US$ 0.48 as a quarterly dividend on October 14.Nutrien scrip galloped by over 60 per cent in 12 months. 

5 Canadian agri stocks to watch closely: NTR, NPK, IFOS, CRP and AFN©Kalkine Media®; ©Garis Studio via Canva.com

2.     Verde Agritech Ltd (TSX: NPK)

Verde Agritech recently announced the commissioning of its Plant 2, which is said to increase its potassium production by up to 1.2 million tonnes per year. The small-cap agriculture firm stated that its second plant has a total capacity of 2.4 million tonnes per year. It is expected to scale the company's overall production to three million tonnes per year.

Earlier in mid-August, Verde revealed signing a strategic sales partnership with Grupo Lavoro, agriculture products distributor in Latin America, to expand its reach to new markets.

Verde stock galloped by roughly 498 per cent in 12 months. The NPK stock shot up by over 160 per cent year-to-date (YTD).

3.     Itafos Inc (TSXV: IFOS)

Itafos said it continued strong production from its Conda facility and contribution from operating its sulfuric acid plant at Arraias helped its revenue reach US$ 155 million in the second quarter of 2022, higher than US$ 103.3 million reported a year ago.

The small-cap fertilizer producer posted adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) amounted to US$ 63.6 million in the latest quarter compared to US$ 33.7 million in the second quarter of last year. The junior agriculture firm improved its net profit significantly to US$ 44.3 million in the second quarter this year, up from US$ 9.6 million in Q2 2021.

Itafos stock rocketed by over 122 per cent in one year and the IFOS stock swelled by over 44 per cent quarter-to-date (QTD). As per Refinitiv information, this junior agriculture stock appears to be gaining momentum as its RSI value stood at 66.18.

4.     Ceres Global Ag Corp (TSX: CRP)

Ceres Global Ag provides procurement, storage, transportation, and marketing solutions to commodity-based products and raw materials, including wheat, canola, oats, barley, etc. Ceres also has a seed and processing segment focused on seed distribution, soybean crush, specialty crop blending, etc.

In early June, Ceres stated that its subsidiary, Riverland Ag Corp, acquired a 50 per cent membership stake in Berthold-based grain originator and marketer Berthold Farmers Elevator LLC from  Columbia Grain International, LLC. On the financial front, Ceres Global posted a net profit of US$ 0.91 million in Q3 2022 relative to a loss of US$ 0.078 million in Q3 2021.

Ceres Global stock was up by almost 19 per cent QTD. The CRP stock zoomed by over eight per cent in August.

5.     Ag Growth International Inc (TSX: AFN)

Agriculture equipment company AG Growth International saw its sales rise by 29 per cent to C$ 389.94 million in Q2 2022 compared to C$ 301.59 million recorded in the same quarter a year ago.

The small-cap agriculture technology firm saw sales from the farm segment grow by 28 per cent to C$ 215.4 million in the latest quarter compared to C$ 168.11 million posted in Q2 2021.

Sales from the commercial segment reached C$ 163.33 million in the second quarter this year, up by 31 per cent YoY. Whereas sales from the digital segment also increased by 31 per cent YoY to C$ 11.2 million in the latest quarter. Notably, the Ag Growth stock spiked by over 34 per cent in 52 weeks.

Bottom line

As Canada is reportedly projected to see an increase in crop production in 2022 due to a 'better' climate, it could boost the global agricultural supplies, which have been hit with uncertainty due to the Russia-Ukraine crisis. Hence, equity investors aiming to capitalize on gains from these estimates could explore the Canadian agriculture stocks discussed here.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.


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