Wheat is a grain that is found in many types of food. Some investors buy wheat stocks and futures to capitalize on the importance of the harvest in the food supply. Wheat is the third most planted crop in the United States by acreage. The harvest has global appeal, and some investors want to position their portfolios to take advantage of the sustainable harvest. This guide will outline some of the best wheat stocks to consider.
5 Best Wheat Stocks
Wondering which wheat stocks to add to your portfolio for additional diversification? These are some of the best wheat stocks to consider.
1. Deere & Co. (NYSE:DE)
Deere & Co. produces agricultural equipment and tractors that wheat growers need to facilitate their operations. The company enjoys healthy profit margins and has rewarded its shareholders with a 200% gain over the past five years. The company has a P/E ratio of 14 and a dividend yield of just over 1%. Deere & Co. is working on an automated tractor that can save wheat farmers time and further cement the company’s dominance within the industry.
2. Bunge (NYSE:BG)
Bunge is an agribusiness company that sells wheat, corn, soybeans and other grains. The company offers investors exposure to several grains instead of being limited exclusively to wheat. Shares are up 8% year-to-date and 51% over the past five years. The company is merging with fellow agribusiness giant Viterra to increase its market share. The deal is expected to close in mid-2024. The company has cyclical ups and downs but has managed to maintain the dividend. The yield on the stock is currently around 2.50%.
3. Archer-Daniels-Midland Co. (NYSE: ADM)
Archer-Daniels-Midland is a wheat-exposed food conglomerate. The company grinds the grain and refines it into wheat and various flours. Archer-Daniels-Midland is an integral part of the food supply chain and has achieved a 70% gain over the past five years. The stock has a P/E ratio of 10 and a dividend yield of over 2%.
4. Adecoagro (NYSE:AGRO)
Adecoagro is an agricultural company based in South America and produces cereals, rice, crops, dairy products and sugar cane. The company has generated positive free cash flow since 2015 despite the cyclical nature of the industry. Its low-cost strategies enable higher profit margins and have helped the company return 39% to shareholders year-to-date. AGRO stock currently has a dividend yield of 3% and a forward P/E ratio of 9. The company’s price-to-book ratio is below 1.
5. CME Group (NASDAQ: CME)
CME Group has no direct exposure to wheat, but the company operates the Chicago Mercantile Exchange. Many investors rely on this exchange to trade wheat futures and other derivatives related to the performance of grains, crops and other commodities. As these exchanges become more frequent, CME Group makes more money. The company has profit margins over 50% and has returned 10% to shareholders year-to-date. The stock also has a dividend yield of 2.36%.
What are wheat stocks?
Wheat stocks are companies that offer direct or indirect exposure to wheat. Some publicly traded companies plant wheat, while other companies offer equipment and other products that help wheat growers. Some of these companies have a global presence, while others derive the majority of their business from one part of the world.
Why invest in wheat stocks?
Investing in wheat stocks exposes you to variations in the price of the crop. Supply chain disruptions have contributed to higher wheat prices in recent years. Many businesses are taking advantage of the strong demand for wheat, such as farmers and equipment manufacturers.
Wheat stocks allow you to profit from rising wheat prices, but these assets also provide diversification. Many wheat stocks also have exposure to other crops and vertical markets. These stocks do not necessarily correspond to 1:1 wheat price movements, but good news for wheat can push these types of stocks up.
Where to Invest in Wheat Stocks
Working with the best stockbroker can minimize your fees and provide you with more opportunities. If you want to invest in wheat stocks, here are some of the best brokers to consider.
Diversify your portfolio
Wheat stocks give investors the opportunity to diversify their portfolios across more sectors. These stocks are cyclical, but strong demand for wheat and other crops makes them relatively reliable over the long term.
Frequently Asked Questions
Can wheat be traded on the stock exchange?
You cannot trade wheat on the exchange. However, you can trade stocks that give you exposure to wheat.
Are wheat stocks a good investment?
Wheat stocks can be a good investment for investors who want exposure to the industry. These stocks are cyclical, but people will always need to eat.
What are the best agricultural stocks to buy?
The best agricultural stocks to buy depend on your risk tolerance and goals. That said, Deere and Co. has rewarded long-term investors well and continues to innovate. However, it may not be the right stock for you depending on what you want from an investment.
Better Wheat Stocks Methodology
The best wheat stocks methodology was to analyze companies with direct or indirect exposure to wheat. Companies had to be able to benefit from the growing demand for wheat to be included in this list.