Sooner or later, the U.S. economy is going to find inflation a force to contend with. Agricultural commodities and exchange traded funds (ETFs) could be one of the beneficiaries of rising prices.
Agricultural commodities are finding renewed interest among investors who have been searching for a bottom ever since 2008’s bubble burst. While no one can say whether we’re there yet, commodities are attracting attention if only because the world needs them to continue running. The best support of this observation is that the demand is always present, as we all need to eat.
Haracio Marquez for Money Morning says that one of his preferred plays is Monsanto (MON).
Monsanto is a company that provides genetically modified seeds that are more resistant to specific weather and pest conditions and deliver superior yields. The company covers the spectrum, as they also deliver the herbicides needed to control insects and weeds, as well as dabble in biotechnology. Monsanto dominates the industry in these very profitable niches, and therefore enjoys a sustainable competitive advantage that vastly differentiates it from other ag companies, Marquez says.
The company also recently beat earnings reports, hitting record sales with little margin subtraction. Not bad, in this economic climate.
- Market Vectors Global Agribusiness (MOO): up 9.3% year-to-date; Monsanto is 8.4%
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.