2 Agriculture - Products Stocks to Buy in a Promising Industry

Industry Description

The Zacks Agriculture – Products industry comprises companies that are either involved in storing agricultural commodities, distributing ingredients to others or engaged in farming crops, livestock and poultry products. Some are associated with purchasing, storing, transporting, processing and selling agricultural commodities or products derived from the same. They operate grain elevators, wherein income is generated from commodities bought and sold using these elevators or held as inventory. Some companies provide nutrients, advanced indoor and greenhouse lighting, environmental control systems, and accessories for hydroponic gardening — the method of growing plants using mineral nutrient solutions in a water solvent instead of soil. A few players offer innovative, plant-based health and wellness products. Companies producing lumber also fall under this industry.

Trends Shaping the Future of the Agriculture - Products Industry

Solid Demand to Support Industry: Food demand is closely tied to population growth, demographic trends and rising incomes, providing a relatively stable foundation for the industry. To capitalize on these favorable trends, agricultural and food companies are investing in innovation and strengthening their product and market strategies to introduce new, high-quality and health-focused food ingredients. Continued improvements in grain-handling technologies and investments in expanded storage capacity are also expected to support industry growth. As food is an essential commodity, demand tends to remain relatively resilient across economic cycles, helping companies maintain stable earnings even during periods of economic uncertainty.

Hydroponics & Cannabis Act as Key Catalysts: Hydroponics is gaining popularity as it gives growers the ability to regulate and manage nutrient delivery, light, air, water, humidity, pests and temperature in an indoor setting. This method enables faster crop growth, with higher yields than traditional soil-based cultivation. It is being utilized in new and emerging industries, including the cultivation of cannabis and hemp. Vertical farms producing organic fruits and vegetables also utilize hydroponics due to the shortage of farmland and environmental vulnerabilities. Vertical farming is the latest agricultural technology, wherein shelves and artificial lighting systems are used to grow produce, thereby minimizing land and water usage. While the cannabis industry has faced short-term challenges from pricing pressure, oversupply and regulatory uncertainties in some markets, its long-term outlook remains favorable as legalization expands, consumer acceptance grows and regulated markets continue to mature. 

Cost-Saving Initiatives to Aid Margins: Players in the industry are facing rising labor, packaging and distribution costs, among others. The U.S. Department of Agriculture (USDA) expects total production expenses, including those associated with operator dwellings, to rise 1% to $477.7 billion in 2026. Livestock and poultry purchases, feed and labor are likely to remain the largest expense categories. While spending on livestock and poultry purchases is projected to record the steepest increase, rising 9.7%, feed expenses are expected to decline 6.8% in 2026. The industry, however, continues to navigate a tight labor market with a spike in wages and higher distribution costs. Tariffs also added pressure to margins. To counter these pressures, companies are focusing on pricing actions, cost-reduction measures and cash conservation efforts to protect margins and strengthen their financial positions. 

Zacks Industry Rank Indicates Bright Prospects

The Zacks Agriculture - Products industry is part of the broader Zacks Basic Materials sector. The industry currently carries a Zacks Industry Rank #54, which places it in the top 22% of the 248 Zacks industries.

The group’s Zacks Industry Rank, basically the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Before we present a few stocks worth considering for your portfolio, let us look at the industry’s recent stock market performance and valuation.

Industry Versus Broader Market

The Zacks Agriculture – Products industry has underperformed its sector and the Zacks S&P 500 composite over the past 12 months. Stocks in this industry have moved up 14.9% in the past 12 months compared with the S&P 500’s 20% growth. The Basic Materials sector has gained 33.1% in the same timeframe.

One-Year Price Performance

Industry's Current Valuation

On the basis of the trailing 12-month EV/EBITDA ratio, a commonly used multiple for valuing Agriculture - Products stocks, we see that the industry is currently trading at 7.30X compared with the S&P 500’s 17.90X. The Basic Materials sector’s trailing 12-month EV/EBITDA is 14.19X. This is shown in the charts below.

Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)

Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)

Over the last five years, the industry traded as high as 11.00 and as low as 3.68X, the median being 5.33X.

2 Agriculture - Products Stocks to Buy

Bunge: The company completed the acquisition of Viterra in July 2025, which created a premier global agribusiness solutions company for food, feed and fuel, well-positioned to meet the demands of increasingly complex markets and better serve farmers and end customers.  Bunge is positioning itself as a scaled, pure-play global agribusiness solutions platform with an integrated “origin-to-customer” footprint across oilseeds and grains, supported by a global value-chain operating model and centralized risk management designed to optimize logistics, capture arbitrage and manage exposures through volatile markets. The company expects to achieve at least $15 in earnings per share by the end of 2030 (from $8.50 in 2025), supported by the ramp-up of inflight capital projects, Viterra integration, alongside ongoing cost synergies and productivity work. For shareholders, Bunge emphasizes cash generation through the cycle, a commitment to return at least 50% of discretionary cash flow via dividends and buybacks, and maintaining an investment-grade balance sheet.

Bunge is an integrated global agribusiness and food company covering the farm-to-consumer food chain. The Zacks Consensus Estimate for the St. Louis, MO-based company’s earnings for 2026 suggests year-over-year growth of 28.4%. The estimate has moved up 1.6% over the past 60 days. BG has a trailing four-quarter earnings surprise of 24.6%, on average. BG currently carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price & Consensus: BG

GrowGeneration: The company delivered the third consecutive quarter of year-over-year revenue growth in the second quarter of 2026, driven by continued strength in its commercial B2B division and the benefits of a more focused operating footprint. Cost-reduction initiatives are also yielding tangible results. The company is advancing its strategy to expand higher-margin proprietary brand sales, which accounted for 39.7% of Cultivation and Gardening net sales during the quarter, and remains on track to reach its 40% year-end goal. Looking ahead, GrowGeneration expects further gains in gross margin and operating efficiency throughout 2026. Supported by inventory optimization efforts, full-year gross margins are projected to range between 27% and 29%. The company also expects to reach adjusted EBITDA of $2-$3 million for the full year, higher than the breakeven EBITDA expected earlier and an improvement from the loss of $6 million in 2025. Profitable second and third quarters are anticipated, driven by the outdoor cultivation season, stronger margins and a leaner operating cost structure compared with 2025. The company’s acquisition strategy focused on acquiring well-established, profitable hydroponic garden centers and proprietary brands, and private-label brands bodes well. 

The Zacks Consensus Estimate for Greenwood Village, CO-based GrowGeneration’s fiscal 2026 bottom line is pegged at a loss of 19 cents per share, suggesting a narrower loss from the 40 cents reported in fiscal 2025. The estimate has moved up from a loss of 22 cents 60 days ago to the current projected loss of 19 cents. GRWG has a trailing four-quarter earnings surprise of 5.06%, on average. GRWG currently carries a Zacks Rank of 2.

Price & Consensus: GRWG

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This article originally published on Zacks Investment Research (zacks.com).

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