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Over the past few years, investors have been looking for Buy Canadian stocks Commodity prices are particularly interested in wheat, corn, oil, barley and oats.
Why? Supply chain issues during the pandemic caused significant fluctuations in commodity prices, and many sought to take advantage of these fluctuations.
However, dealing in commodity futures and futures contracts can land investors in hot water. So some people look to buy individual ETFs or stocks. Instead of wheat prices, firms exposed to wheat prices, or other commodities such as certain commodities Best Canadian Iron Ore StocksInstead of iron ore price fluctuations.
In this article, we will cover it Best Canadian wheat stocks Must buy today.
There is only one particular option on this list, which is a pure play on wheat. Canada’s wheat stocks are primarily involved in equipment manufacturing, wheat exports, and helping grow it through fertilizer.
If you want to buy real wheat stocks, you can visit Archer-Daniels Midland, a US listed stock.
But in this article, we’ll focus on the best Canadian wheat stocks.
What are the best Canadian wheat stocks to buy now?
- Deucrium Wheat ETF (WEAT)
- Ag Growth International (TSE:AFN)
- Canadian National Railway (TSE:CNR)
- Nutrition (TSE:NTR)
Deucrium Wheat ETF (WEAT)
You might wonder why we’re starting this article on the best wheat stocks to buy in Canada with a US-listed ETF.
It need not be a company that produces wheat or a company that manufactures machinery for industry.
The Teucrium Wheat ETF provides exposure to the price of wheat without having to deal with futures contracts, which can be confusing for investors.
The Fund’s objective is to reflect daily changes in the price of wheat for future supply, as measured by the Tugrium Wheat Index. The Fund seeks to achieve its investment objective by investing in benchmark component futures contracts.
It has total assets under management of around $308M, and fees for this flagship ETF are relatively high at $1.90 per $1000 investment.
This is not an option we expect to hold for a long time. Instead, the ETF you trade is based on your feelings about forward-looking wheat prices.
Ag Growth International (TSE:AFN)
Ag Growth International does not necessarily produce wheat or fluctuate based on the price of wheat. However, it manufactures and sells grain handling, storage and conditioning equipment.
Think augers, conveyors, storage tanks, ventilation equipment and drying systems. The company provides equipment and storage to bring grain to market.
It has manufacturing facilities in Canada, USA, Italy, Brazil, France, United Kingdom and India.
Its geographical divisions are Canada, USA and International.
The company has gone through a rough patch lately, with a post-pandemic dividend cut and some stagnant earnings. However, it is expected to rebound significantly as analysts expect high single-digit growth in revenue and earnings.
As a manufacturer, the firm is exposed to various input costs. If you want direct exposure to wheat, you should check out the wheat ETF above. But if you want a company that will benefit from the growing demand for agricultural products, Ag Growth is definitely an option.
Canadian Natural Railway (TSE:CNR)
CN Rail is far from a pure-play wheat producer. However, since grains and fertilizers account for more than 15% of its shipping capacity, it will indirectly expose you to the industry.
The Canadian National Railway spans Canada from coast to coast and extends through Chicago to the Gulf of Mexico.
By 2021, CN will account for CAD 14.5 billion in total revenue from intermediate containers (25% of consolidated revenue), petroleum and chemicals (21%), and grains and fertilizers (16%).
Forest products (12%), metals and mining (11%), vehicle exports (6%), and coal (4%). Other items make up the rest of the income.
Despite a possible economic downturn in 2023, Canadian National Railway continues to post exceptional results. The company has been consistently at the top of valuations for several years now and is expected to post high single-digit revenue and earnings growth in 2024.
A company with this size of economic moat is undoubtedly something long-term investors will want to look at today for its wheat exposure and general earnings power.
Nutrition (TSE:NTR)
Nutrien is one of the world’s largest producers of potash. The company is the leader in installed capacity, with a share of approximately 20%.
But when it comes to wheat exposure, Nutrien is America’s largest agricultural retailer. It sells fertilizers, chemicals, seeds and other services directly to farmers.
You probably know that we need fertilizers, chemicals and seeds to grow wheat, corn, oats etc.
The company has seen a cooling in prices due to falling potash prices, but I wouldn’t let that stop you from investigating whether Nutrien is a good fit for your portfolio today. The company is one of the blue chip Dividend paying stocks. Although it is exposed to the cyclical nature of commodity prices, it has proven to be a reliable earner in its nutritive days and earlier in 2018 with the likes of PotashCorp and Agrium.
Revenue and earnings are expected to decline in 2023 and 2024. However, considering the company trades at only 6 times expected earnings at the time of writing, this bullish outlook seems overpriced.
Overall, direct wheat exposure is limited here in Canada, but there are plenty of ways to get exposure in the industry.
Whether it’s agricultural machinery, shipping and storage, or assisting in production through fertilizers and chemicals, there are many ways to gain exposure to wheat in this article.
Wheat ETFs are useful for traders who want to take advantage of short-term fluctuations in wheat prices. With the ongoing Russia-Ukraine conflict, wheat is likely to be particularly volatile based on the news.
But for those paying attention to the industry, whether it’s the 2022-2023 harvest, Canadian Grain Commission data, or weaker-than-expected exports, these producers, exporters and fertilizers are unlikely to move as fast as a future-based ETF like Teucium.
If you are looking for more exposure Best Agricultural Stocks, read this article here.
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