5 Stocks With Monster Profit Potential

If you think the world has too many people now, just wait. According to the United Nations, the world's population is projected to grow an additional 44% through 2100.

Although this may be alarming from an environmental perspective, it's fantastic news for investors, as it virtually guarantees global economic growth for our lifetimes. The question is how to play it profitably.

My recommendation is to invest in any of the five agricultural companies listed below. With an additional 3 billion mouths to feed by the end of the century, and a continued increase in daily global per capita calorie consumption, these companies should do very well.

1. PotashCorp (NYSE: POT  )
PotashCorp is the world's largest supplier of potassium compounds commonly called... wait for it... potash, a fertilizer component that helps increase farmers' crop yields. The company enjoys a strong competitive position in its industry, as potash is produced in only 12 countries globally, and a new potash mine costs about $4 billion to build according to SmartMoney magazine. Not to mention, its stock trades for only 13 times earnings.

2. Monsanto (NYSE: MON  )
Often viewed as the agricultural equivalent of Dr. Evil, the primarily herbicide and genetically modified seed company continued to blow away earnings estimates today. As fellow Fool Alex Planes noted earlier, its most recent earnings per share clocked in at $0.23, compared to estimates of $0.16. And while the stock trades at a higher earnings multiple than PotashCorp, at nearly 26, its iron grip on the genetically modified seed market will pay off handsomely as the world's hunger for food continues to grow.

3. CVR Partners (NYSE: UAN  )
Like PotashCorp, CVR Partners is one of the world's leading fertilizer companies. Its specialty lies in urea ammonium nitrate and other ammonium fertilizers, which are a must for many agricultural producers. In its latest earnings release, covered by Fool Vibhuti Shah, the company reported net income of $36.3 million compared to $13.5 million in the same period a year ago. And its sales rocketed upward from $46.6 million a year ago to $77.2 million this year.

4. Terra Nitrogen (NYSE: TNH  )
Selected by Fool Neha Chamaria as one of her top three fertilizer picks, Terra Nitrogen produces and sells nitrogen fertilizer products for agricultural and industrial applications. To say that 2011 was a good year for the company would be an understatement. In the first nine months of the year, its sales surged by 42% on a year-over-year basis, while net profits shot up by a staggering 178%. And to top it off, the company pays a monster 8.8% dividend yield.

5. Yongye International (Nasdaq: YONG  )
As its name likely implies, this Chinese agricultural company's biggest asset is also its biggest liability. Namely, that it's based in China. As Neha similarly noted, Yongye's shares were beaten into submission in 2011 due to the market's recent skepticism of publically traded Chinese companies. If its numbers are to be believed, however, then investors may be missing out on a huge opportunity here. In the third quarter of last year, for example, Yongye's revenue increased by almost 96% from the year ago period -- almost 21% of which came from new provincial markets that the company had been cultivating for a number of months. Despite the risk, in turn, this may be a company you want to keep on your radar, as the future demand for food in China should continue to accelerate as more and more of its citizens are lifted out of abject poverty.

Plant your seed now
While nothing in this world is certain -- except death and taxes, according to Benjamin Franklin -- these five companies give your portfolio a fighting chance of a solid performance over years to come. For another great recommendation courtesy of our analysts, take a look at our recently released free report "The Motley Fool's Top Stock for 2012." To access this limited-time report while it's still available, click here now -- it's free.

Contributing Fool John Maxfield does not own shares in any of the companies mentioned above. The Motley Fool owns shares of Yongye International. Motley Fool newsletter services have recommended buying shares of Yongye International. Motley Fool newsletter services have recommended creating a synthetic long position in Monsanto. 

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 06, 2012, at 2:31 PM, KGaider wrote:

    TNH DOES NOT have a dividend yield of 9.2%. It did when the stock was $150.00. At today's price of ~ $184.00 the dividend yield is now 7.57%.

  • Report this Comment On January 06, 2012, at 4:12 PM, Swede46 wrote:

    I keep trying to count to four, but keep up coming with 5 companies on the list.

  • Report this Comment On January 16, 2012, at 10:31 PM, tkell31 wrote:

    Lol, shocking, another MF pump piece for a RTO scam.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1753714, ~/Articles/ArticleHandler.aspx, 9/1/2014 3:12:00 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement