While some investors are looking for yield as a means of return in a volatile market, others are making the most of the momentum caused by oscillating sectors. Is there upside left in the market? The key is to seek out growth areas, wherever they may be. From pot stocks to renewables, from tech to miners, there are still some areas that are climbing beyond the rest of the TSX.
But how about the looming recession that a growing number of pundits are predicting? With so much uncertainty in the markets, finding areas of investment that not only offer growth but also offer safety isn’t straightforward. However, there is one area that investors may be overlooking in the rush to safe havens that still provide growth: Agriculture.
It’s not an obvious area to go for if investing for capital gains is your trading strategy. However, there are two stocks in the agri space that can offer investors both upside and safety: Nutrien (TSX:NTR)(NYSE:NTR) and Village Farms International (TSX:VFF)(NASDAQ:VFF). Let’s take a look at why these two stocks are a defensive play for consumer staples safety as well as relatively assured capital appreciation.
Bell peppers, tomatoes, cucumbers — and cannabis
The summer favourite for cannabis upside, Village Farms, is down this week after announcing a sale of common shares — a move that has put some investors in the mood for harvesting their capital gains. Village Farms also found itself vulnerable to the sell-off caused in part by HEXO, which itself tanked by almost 40% last week, dragging down the legal pot sector.
Still, Village Farms is a frontrunner not only in the marijuana race, but in the TSX index itself. The veggie grower placed third in the inaugural TSX 30, a new initiative to showcase the fastest-appreciating stocks by share price. Village Farms has shot up by a staggering 868% in the last three years. New investors should wait for the current dip — down 18% over the last five days — to bottom out before stacking shares.
Precision farming: A growth trend in the agri sector
As a world leader in essential mineral inputs for crops, Nutrien is a go-to for investors seeking to capitalize on the growing interest in precision farming. Although Nutrien has scaled back its potash production on a weakening market, the outlook for its flagship mineral is strong in the long term, making this popular dividend stock with a 3.63% yield a strong play for agri growth.
Indeed, with a growing emphasis on efficiency and quality in the agri industry, the potash market could explode as essential mineral inputs gain traction, especially in countries with fast-growing populations. In short, precision farming is a strong play on upward momentum.
The bottom line
While some stock market observers may not have Nutrien pinned as a growth stock, the fact that its products are key to the growing trend in precision farming makes it a strong contender for the appellation. Meanwhile, Village Farms stock is a clear buy for capital gains investors looking for a fast and fairly assured route to steep returns in the legal cannabis space as well as the classically defensive consumer staples market.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool owns shares of Village Farms International, Inc. Village Farms is a recommendation of Hidden Gems Canada. Nurtrien is a recommendation of Stock Advisor Canada.