bunge limited: forever stock no. 7
DESCRIPTION
Top 10 Forever Stocks | a series brought to you by Wyatt Investment Research ----------------------------------------------------------------------------------------- Forever Stock No. 7 is Bunge Limited (NYSE: BJ). For this report, I researched a range of industries to bring you stocks that should hold up regardless of market conditions. To keep your portfolio diversified, I chose companies across several unrelated industries, including energy, healthcare, financials, technology, industrial goods and consumer staples. What’s more, several pay healthy dividends, a must in today’s low-interest-rate environment. These stocks are built to last, meaning you should hold onto them for the long haul. I’m sure you’ll be pleased with their performance for many years to come. -----------------------------------------------------------------------------------------TRANSCRIPT
YOU GOTTA EAT !
F O R E V E R S T O C K N O . 7
Bunge Limited (NYSE: BG)
F O R E V E R S T O C K N O . 7
The global economic recovery is uncertain; it could fizzle or boom. But one thing is certain about the world; its population will increase. And food supplies will need to match or exceed that amount of growth.
The United Nation projects that the world’s population, which hit the seven-billion mark last year, will climb to nine billion by 2050. To feed those mouths we must produce as much food in the next 40 years as we have in the last 8,000 years.
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9 BILLION MOUTHS TO FEED
It is a fact of our survival
that humans need food. And although some of it does grow on trees, it still takes decades to obtain the land and machinery used to successfully operate a farm. The global population is quickly outpacing the growth of developed farmland.
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The demand for livestock feed has also increased in recent years due in part to emerging markets, which have typically consumed grain or rice.
It is a natural progression to make – middle class consumers prefer pork and beef over rice and millet. Populations overseas are increasing the amount of meat consumed each year. As economies expand so too will personal incomes. And that will increase the ability and desire of consumers to obtain higher-quality foods.
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For visible evidence of this trend, look no further than the great old United States back in the early 1900s.
The U.S. was emerging as a global power and its economy and population were booming. In 1910, the average person consumed 51 pounds of beef each year. By 1970, the average U.S. citizen was ingesting 85 pounds of beef each year. That’s a 70% increase.
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It was not just population growth that drove overall beef prices higher; it was the growth to personal income. Residents demanded better food as incomes rose. And income growth will outpace population growth substantially in the future.
Even though the world population is expected grow by 25%, or two billion people, in the next 40 years, the incomes of emerging economy populations will triple in that time. And that growth in discretionary income will add a colossal strain to the world’s food supply.
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A Colossal Strain to the World’s Food Supply
The increase in demand for food, as well as supply disruptions, will result in a huge push by farmers to increase their crop yields in the future – both near and long term. And I have found one of the most reliable stocks to benefit from the agricultural boom.
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has a wide variety of business operations, but at its core is a leading processor of crops - mainly wheat, sugar and oilseed. The 190-year old Bunge chiefly processes and stores agricultural commodities such as wheat, but it has several other important divisions, the most prominent of which is its sugar business.
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Bunge Limited (NYSE: BG)
Bunge collects sugar and processes that sugarcane to make ethanol. It also dabbles in the fertilizer business, but it’s mostly undoing that segment of operations.
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The agricultural segment is its most prevalent business and it also stands to benefit the most from the global trend toward greater meat consumption. Bunge primarily handles processing oilseeds, grains and corn. And the company processes those oilseeds and corn into vegetable oils and protein meals for livestock consumption. The grains it processes are found in common food groups such as cereal and beer. And this is no small business anymore.
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GLOBAL MEAT CONSUMPTION
Bunge’s processing operations are spread throughout the world. Last year the company expanded production lines in North America, Turkey and China. Bunge also keeps 58% of its long-lived assets in Brazil, but has started to greatly expand in Asia.
Brazil grows 25% of the world’s sugar, but boasts 50% of the sugar cane exports. Bunge management expects to see a growing demand in Brazil’s sugarcane business from the huge development of ethanol.
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Bunge’s financials have experienced their ups and downs, but the long-term growth trend is certainly higher. In 2006, Bunge had revenues of a mere $26 billion compared to $84 billion in 2013. It’s clear that Bunge is a big player in a stable business sector. Though the market is filled with a host of uncertainties, there’s no question about the need for more and more food. Bunge stands to benefit from the boom in agricultural commodities, which is clearly a long-term trend.
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A Big Player in the Stable Business Sector
As an added bonus to this important exposure to the agricultural sector, Bunge shareholders receive a $1.20 per share cash dividend, which currently yields 1.5%.
Bunge will always have a place in the world, and you should make a place for its stock in your portfolio.
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WHAT THIS MEANS FOR YOU.. .
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