The Russia-Ukraine war has caused bullish momentum in agriculture commodities and securities. Jim Cramer said on ‘Mad Money’, “given that Russia and Ukraine account for roughly a third of the world’s wheat production, there’s a real possibility that we could be looking at a global food shortage as this drags on.”.
The CNBC host continued to say “I think the best approach to the bull market in agriculture is by betting on a basket of ag-related stocks, because when farmers make a lot of money, they pour it into seeds, equipment and fertilizer,” he added.
There are several agriculture related microcap companies with high upside that investors should look at today.
One commodity that is seeing a rise in prices recently is Hemp. Last year, producers were sitting on so much of the crop that less supply was cultivated. With increasing demand, and a tightened supply, hemp prices are on the rise.
Generation Hemp, Inc. GENH is one of the more interesting ways to play this agriculture bull market. GENH is a midstream hemp cultivation company with several verticals utilizing hemp hurd. The industrial hemp market size is expected to reach USD 16.75 billion by 2030, registering a CAGR of 16.8% according to Research and Markets.
GENH is most likely the best pure hemp play under $1.
When it comes to inflationary prices on food, especially wheat, as Ukraine and Russia account for nearly 30% of the world’s wheat output, hemp is an intriguing substitute. Both wheat germ and hemp seeds are high in calories, however, hemp seed actually has 54% more calories than wheat germ – wheat germ has 360 calories per 100 grams and hemp seed has 553 calories. For macronutrient ratios, wheat germ is much heavier in carbs, much lighter in fat and similar to hemp seeds for protein. Wheat germ has a macronutrient ratio of 24:54:23 and for hemp seeds, 21:6:73 for protein, carbohydrates and fat from calories.
Generation Hemp, Inc. GENH operates through its wholly-owned subsidiary GENH Halcyon Acquisition, LLC, at a facility located in southwestern Kentucky.
GENH’s modular drying operation, using four belt dryers. Each dryer is equipped with variable temperature settings that provide for a more efficient drying process while protecting the plant’s valuable cannabinoid and terpene properties. These modular systems can produce approximately 1,200 pounds of uniformly dried hemp per hour.
In 2020 the company processed over 6 million pounds of wet hemp for various Kentucky and Tennessee clients and was expected to have dried approximately 11 million pounds of wet hemp in 2021.
A couple agriculture microcaps are presenting at conferences this week:
AgriFORCE Growing Systems Ltd. AGRI is an interesting AgTech play. AGRI is currently presenting at the 14th Annual Global AgInvesting 2022 Conference, taking place on April 4-6, 2022 at the Sheraton New York Times Square in New York City. AGRI utilizes technologies including AI and automation to grow and propagate its crops.
S&W Seed Company SANW is at the Lytham Partners Spring 2022 Investor Conference taking place virtually on April 4-7, 2022. The company presented on Monday the archived webcast is currently available.
A couple microcap agriculture stocks recently released 2021 FY financial results.
Arcadia Biosciences Inc. RKDA, had unfavorable financial results in 2021 with 16% less revenues, 103% more operating expenses, resulting in a 178% increase in net loss. Although, the company had several business highlights that have some investors bullish on 2022, including expanded product offerings.
Marrone Bio Innovations, Inc. MBII On the other hand had several impressive highlights from its 2021 FY results:
- Full year revenues rose 15.5%, with a 40.2% increase in the fourth quarter.
- Gross profit grew 19.1% and 31.5% for the full year and fourth quarter, respectively, with margins exceeding 59% in both periods.
- For the full year, net loss was $16.6 million and Adjusted EBITDA1 loss was $8.7 million, improvements of 17.9% and 21.2%, respectively.
The company recently announced a merger with Bioceres Crop Solutions BIOX have entered into a definitive agreement to combine the companies in an all-stock transaction.
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