This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

There's Gold In Them Steaks!: 3 Undervalued Agricultural Stocks

James Dennin, Kapitall: We looked for undervalued agriculture stocks – from ranchers to dairies – by looking at levered free cash flow. 

So cows have not, nor ever been, trendy investments. One hedge fund manager would  say the last good year was 1865. 

And yet this seems surprising to me, because in America, we eat lots of meat. About twice as much as the typical person worldwide. We continue to eat lots of meat even as we learn more and more about how red meat is  bad for our health, or that it pollutes more than cars.

Read more from Kapitall: Alternative Energy Stocks: Getting Warmed Up Or Already Close to the Sun?

The main thrust of the problem has to do with cost of production. The science behind livestock grows more sophisticated by the day - so much so that most cows now receive personalized food allotments and genetically complimentary mates found in catalogues. And you can imagine what that kind of dating service costs.

But as the team at Planet Money found, even genetically-modified super-cows aren't very good at generating much profit, at least when you compare profit with the hours most farmers typically work. 

Investing ideas

And yet that might be starting to change. Meat output in the US has stayed steady over the last ten years – but the value of that output had almost doubled over the same time. 

If the price continues to go up while the supply remains so steady, it's easy to imagine beef becoming more like a commodity, if it's not already. One small acknowledgement of this trend is that the Department of Agriculture began keeping track of the price of premium, "grass-fed" beef this fall. 

So in case there really is gold in them thar steaks – we decided to look for undervalued stocks in the meat and dairy industry. To do that we looked at the  levered free cash flow to enterprise value (LFCF/EV) ratio among these agriculture stocks, which measures how much debt-free cash a company brings in relative to its size.

There were three companies who see value in beef that made it through our screen.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%
TSLA $151.04 0.00%
YHOO $27.04 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs