Preparing for Armageddon/the Rapture/World War III/the Zombie Apocalypse? Here is an investment idea to add to your survival kit: Farmland.
Similar to other scarce and tangible resources, like gold and water, farmland is seen as a safe investment in times of financial uncertainty. Mamta Badkar and Joe Weisenthal of Business Insider call it "the ultimate crisis hedge" because of the unrivaled importance of food. And Barton Biggs of Morgan Stanley believes that stocking up on the basic necessities, especially food, is necessary for one's "doomsday safe-haven" (via Business Insider).
Whether or not modern society collapses over the next several decades, it is certain that the rapidly expanding global population will put upward pressure on food prices.
"Over the next 40 years, the population of the world is projected to grow from 6 billion to 9 billion, hugely increasing the strain on arable farmland worldwide," according to MoneyNews.com. "I'm convinced that farmland is going to be one of the best investments of our time," said Jim Rogers, legendary investor and George Soros partner (via ContrarianProfits.com).
Farmland can generate 3% to 5% in annual rental income in addition to around 5% annual appreciation in the value of the land, according to Jilian Mincer of The Wall Street Journal.
"Since the recession began in December 2007, financial analysts say, agricultural investments have easily outperformed the Standard & Poor's 500 index," reports P.J. Huffstutter of the Los Angeles Times.
Investing directly in farmland is becoming increasingly difficult, however.
"The number of high-quality farms offered on the market is down 30% to 40% ... Even medium-quality land is 20% to 30% less available for purchase," says Loyd Brown of Hertz Farm Management (via The Wall Street Journal).
An alternative to buying land is to invest in companies that benefit from the appreciation of and rental income from farmland. To help you seek out the ideal farmland investments, here is a list of companies that purchase and manage farmland.
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Disclosure: Kapitall's Andrew Dominguez does not own any of the shares mentioned above. Data sourced from Finviz and Reuters.
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