6 Best Wheat Stocks to Buy Now

Inflation has been painful around the world this year. One sector of the stock market that has mostly outperformed the overall market is wheat stocks. Wheat stocks can be food processors, machinery makers and many other types of companies. Rising wheat prices could help each type of wheat stock.

Part of the reason wheat prices are on the rise is because of higher oil and gas prices. Like other industries, wheat stocks need a lot of energy to plant, harvest, and process wheat and other commodities. Wheat stocks get that energy from oil and gas. Higher oil and gas prices have trickled down to other sectors of the economy, like wheat stocks.

When the conflict between Russia and Ukraine began, many countries worldwide sanctioned Russian oil and gas. The sanctions included reductions or the elimination of Russian oil and gas imports. Since Russia is one of the biggest exporters in the world, supply dried up quickly. At the same time, the demand for oil and gas remains high.

The supply and demand imbalance has caused oil and gas prices to rise dramatically in 2022. Because the demand for food processed by wheat stocks is essential to humans, consumers may see higher prices for a while. A growing global population will only add demand in the years ahead.

The wheat supply may be reduced because Ukraine is a leading wheat exporter. Savvy investors may see an opportunity to hedge their portfolios against inflation by including wheat stocks. Read on for more info on wheat stocks.

Best Wheat Stocks to Buy

No. 6 Deere and Co (NYSE: DE)

DE is the maker of world-famous John Deere farming equipment. Farmers in the U.S. ask each other one question: Red or Green? If a farmer answers green, they buy John Deer tractors and farm equipment. Additionally, John Deere is an iconic brand among farmers. Among other things, the company’s tractors and farming equipment are used to plant and harvest wheat worldwide.

Earlier in 2022, Deere unveiled its driverless tractor and GPS. According to a press release from the company, to use the autonomous tractor, farmers only need to take the machine to a field and configure it for operation. Using its GPS, they can swipe from left to right to start the machine. While the machine is working, the farmer can leave the field to focus on other tasks while monitoring the machine’s status from their mobile device.

Deere stock is down 13% this year, which is better than the S&P 500 stock index. It trades at a P/E ratio of 16x and pays a dividend yield of 1.5%.

No. 5 Titan Machinery (Nasdaq: TITN)

TITN sells tractors and farming equipment to farmers who answer ‘Red.’ Case IH’s iconic red tractors make up the other half of the duopoly in farming equipment in the U.S. Further, Titan Machinery operates dealerships throughout the American Midwest with exclusive rights to sell Case IH equipment.

With crop prices rising, this could be a great year for farmers. Furthermore, extra cash in farmers’ pockets could mean they will expand or replace their tractors, combines, planters, etc. Titan Machinery stock has come down over 32% this year. Additionally, this wheat stock now trades at a P/E ratio of 7x.

No. 4 Archer-Daniels-Midland (NYSE: ADM)

ADM is commonly known by investors as ADM. ADM is a giant food processor that takes wheat and other grains and makes them into products used in food, beverages, and animal feed. According to its investor slide deck, ADM can process about 980,000 bushels of wheat per day. The company has high sustainability goals. One of those goals is to enroll farmers in its sustainable water program. ADM hopes to enroll enough farmers that it covers at least 10% of wheat processing acres in the U.S.

ADM stock has a market cap of $41.3 billion and pays a dividend yield of nearly 2.2%. The stock is up 8% this year, which is better than the S&P 500 stock index.

No. 3 Bunge (NYSE: BG)

BG processes wheat and other grains throughout the world. In addition to processing food, the company is also a seller of wheat. According to its first-quarter earnings report, Bunge has increased its ROIC (Return on Invested Capital) every year since 2018 to 14.4%. Over the same time, the company has increased its discretionary cash flow from $783 million to $1,876 million.

The company is also optimistic about the remainder of 2022. In the earnings report, this wheat stock increased its full-year 2022 adjusted earnings per share outlook to $11.50. Bunge stock is down 6.4% this year and pays a dividend yield of 2.85%.