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Many think Cargill stock would be one to own if it were publicly traded. It's one of the biggest companies in the world, and it plays a major role in various industry supply chains, mainly agriculture and livestock.
Unfortunately, the company's size is the very thing that could keep retail investors from seeing a Cargill IPO anytime soon. Thanks to the size of its holdings and solid debt rating, they have no good reason to go public at the moment.
But we might have a better play on the agricultural market...
Cargill is a giant company pushing 25% of U.S. grain exports and 22% of America's meat supply. What's more, all of the eggs you see at McDonald's go through Cargill plants.
And still, it's not the best ag stock to buy today.
The company's private shareholders have been pushing for an IPO for years. It's thrown a bone to employees in the form of a stock plan.
Now, with Cargill owned by a combination of employees and long-time family stockholders, you're free to sit and wait for Cargill stock until the cows come home.
Or, you can profit before the cows come home with a play from Money Morning's Shah Gilani.
First, here's why everyone's talking about Cargill.
What Is Cargill?
Cargill is a Minnesota-based food company founded in 1865. It's the largest private company in America.
This company trades grain and other food ingredients like palm oil, starches, and syrups. Food is not all it does, however. Cargill also operates in the financial services, energy, steel, and transport industries.
The Fortune 500 consists of all public companies. But if Cargill were public, it would rank in the top 15, right alongside AT&T and McKesson.
Cargill's 2021 revenue has been reported as high as $134 billion. That's up from $114 billion in 2018. They have 166,000 employees in 66 countries.
They have nearly a monopoly on the processed food market, especially Alberger process salt - the only salt used to process fast food.
This all sounds great if you're talking about a public company. But again, Cargill doesn't appear to be going public any time soon.
The good news is that you still have many ways to profit from the agriculture market.
ETFs to Buy Instead of Cargill
Why invest in one food stock when you can buy a basket? Investing in ETFs is a great way to profit from the overall growth of a broad industry. And right now, with restaurants reopening and food demand rising, agriculture is spiking.
Shah recommends three ag ETFs to put in your "ag basket." These are pure plays in the industry that expose you to corn, wheat, and soybeans.
They are Teucrium Corn Fund (NYSE: CORN), Teucrium Wheat Fund (NYSE: WEAT), and Teucrium Soybean Fund (NYSE: SOYB). They all track futures contracts on these commodities, traded at the Chicago Board of Trade.
Shah recommends these make only 3% of your portfolio, with 15% trailing stops under each investment. And your total ag investment can be anywhere between 10% and 20%.
Now, even with these ETFs, there's still room in your ag basket for a few more stocks. Here are some publicly traded ag stocks that could rival Cargill.
Stocks to Buy Instead of Cargill
Cargill may not be public. But two of its biggest competitors are.
Bunge Ltd. (NYSE: BG) and Archer-Daniels-Midland Co. (NYSE: ADM) both sell food-processing and agricultural goods. Granted, they each have about one-third the revenue of Cargill. But with Cargill's dominance in these markets, second and third place can be a big deal.
If we were looking at the 2020 COVID market, we might think this industry was going down the tubes. Bunge fell over 50% in the last five years. However, between March 2020 and now, the stock has climbed to a five-year high of $90 then plateaued around $77.
As for Archer-Daniels, the stock just pulled back from an all-time high of $66 to $60. Again, in March 2020, you would have been looking at a 30% loss on the last five years. But like Bunge, ADM has proven resilient.
Both companies have performed rather well in their lifetimes. Bunge is up 102% since 2009, and ADM is up 39% in the last five years.
You might expect this kind of performance from stocks that provide essential goods and services that never go out of style.
If Cargill ever goes public, there's a good chance it could perform even better. But so far, the only investors set up to profit from Cargill in any near future will be the private ones.
That's why you're better off investing in a more diverse "ag basket" as Shah has said. It's high time to do it, since a large portion of the market has yet to catch on to the "reopening" spike in agriculture.
Build Your Portfolio with One of the Most Trusted Names on the Stock Market
You've probably seen our Chief Investment Strategist Shah Gilani on TV. You can catch him every week on FOX Business's "Varney & Co.," and he's also a frequent guest on CNBC.
Shah's goal is to show everyday folks how they can achieve financial freedom. And with his Money Map Report, you'll have the information, recommendations, and step-by-step instructions you need to learn how to build a powerful portfolio - fast.
Click here to learn more about Shah's Money Map Report and how you can join today.
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About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.