Two Agriculture Stocks Capitalizing on the Shift Toward Healthy Food and Sustainable Farming

The agriculture and commodities sector is experiencing a significant transformation driven by fundamental shifts in consumer preferences and technological innovation. As populations grow and consumers increasingly seek healthy food options, the Agriculture - Products industry stands poised for meaningful expansion, with select companies positioned to capture substantial gains.

Why Investors Should Pay Attention to Agricultural Commodities Now

Population growth remains the single most powerful demand driver for agricultural products. The United Nations projects global population will reach 8.5 billion by 2030 and 9.7 billion by 2050—translating to approximately 50% increased demand for food globally. This demographic trajectory creates a durable tailwind for producers, distributors, and agricultural technology providers.

Beyond raw population numbers, consumer behavior is shifting meaningfully. Rising awareness around food ingredients and the growing preference for healthier food options are reshaping purchasing decisions across developed and emerging markets. Companies responding to this trend through product innovation and ingredient transparency are winning market share. This intersection of growing quantity demand and upgraded quality expectations creates a favorable backdrop for well-positioned agricultural enterprises.

The industry benefits from relative economic resilience—food consumption remains stable across economic cycles, providing steady cash generation regardless of broader market conditions.

Innovation as a Competitive Advantage: Hydroponics and Vertical Farming Lead the Way

Traditional soil-based agriculture faces structural constraints: limited arable land, water scarcity, and climate vulnerabilities. Advanced cultivation methods are addressing these challenges while delivering superior returns.

Hydroponics enables growers to precisely control nutrient delivery, lighting, temperature, humidity, and pest management in controlled indoor environments. This methodology produces faster crop cycles and higher yields compared to conventional farming. The advantage becomes even more pronounced in vertical farming operations, where shelves and artificial lighting systems maximize production per square foot while minimizing water consumption and land requirements.

These technologies have found natural applications in emerging categories, particularly cannabis and hemp cultivation following legalization trends. The United States now represents the world’s largest cannabis market following legalization across multiple states for both medical and recreational purposes. Internationally, momentum toward legalization continues building, opening pathways for cross-border expansion and investment opportunities.

Industry Valuation Presents Opportunity Against Broader Markets

The Agriculture - Products industry currently ranks #99 among 243 Zacks-ranked industries, placing it in the top 41% by performance metrics. Historical analysis shows the top 50% of ranked industries outperform the bottom 50% by a factor exceeding 2-to-1.

From a valuation perspective, the industry trades at an 10.17X trailing 12-month EV/EBITDA multiple, significantly discounted compared to the S&P 500’s 18.51X valuation. The Basic Materials sector trades at 14.62X. Over the past five years, the industry has ranged from 3.81X to 10.40X, with a median of 5.79X.

Performance metrics tell an important story: while the Agriculture - Products industry declined 11.9% over the past 12 months, the S&P 500 gained 17.9% and the Basic Materials sector advanced 27.4%. This relative underperformance has created potential valuation asymmetries for contrarian-minded investors.

Bunge Global: Scale and Synergy Drive the Transformation

Bunge Global S.A BG completed its transformational $34 billion acquisition of Viterra Ltd. in July 2025, creating a premier global agribusiness platform with diversified reach across food, feed, and fuel supply chains. The combined entity now connects major agricultural production regions with fastest-growing consumption centers more efficiently than either company could independently.

The merger delivers tangible synergies across multiple dimensions. Joint commercial opportunities are being identified and executed, while vertical integration efficiencies—particularly in logistics optimization—are materializing ahead of initial projections. The company is already documenting meaningful integration benefits reflected in third-quarter 2025 results.

Bunge maintains disciplined capital allocation priorities, balancing shareholder returns through dividends and buyback programs with reinvestment in growth initiatives. The St. Louis-based company has delivered an average trailing four-quarter earnings surprise of 11.75%.

Consensus estimates have moved upward over the past 90 days. While fiscal 2025 is expected to show an 18.61% year-over-year decline, fiscal 2026 estimates suggest 16.4% growth recovery. The company carries a long-term estimated earnings growth rate of 5.13% and maintains a Zacks Rank of #2 (Buy).

GrowGeneration: Profitability Returns Amid Strategic Execution

GrowGeneration GRWG, based in Greenwood Village, Colorado, operates as one of the United States’ largest specialty suppliers for controlled environment agriculture, commercial cultivation facilities, and retail garden centers. The company serves the exact intersection of trends outlined above—hydroponics, vertical farming, and cannabis cultivation.

Third-quarter 2025 results marked an inflection point. The company delivered double-digit sequential net sales growth of 15.4%, returned to positive adjusted EBITDA of $1.3 million, and achieved gross margins exceeding 27%. This adjusted EBITDA represents the company’s strongest profitability in four years, demonstrating successful strategic execution.

Cost discipline proved decisive: store operating expenses fell 27.8% while total operating expenses declined more than 30% year-over-year. Proprietary brands emerged as a significant driver, accounting for 31.6% of Cultivation and Gardening net sales, up from 23.8% previously. Management guidance suggests proprietary brands will represent approximately 40% of segment revenues in 2026, further expanding margin potential.

The company projects revenue growth and positive adjusted EBITDA delivery throughout 2026. Operating from a debt-free balance sheet with substantially reduced cost structure and an expanding multi-channel brand strategy, GrowGeneration is positioned to scale as a lean, profitable enterprise. The company’s acquisition strategy—targeting well-established, profitable hydroponic garden centers and proprietary brand platforms—should continue supporting sustainable growth.

Consensus estimates reflect improvement trajectory: the fiscal 2025 loss is estimated at 35 cents per share, narrowing from fiscal 2024’s 66-cent loss. Fiscal 2026 is projected at a 15-cent loss, suggesting further progression toward profitability. Both 2025 and 2026 estimates have moved higher over the past 90 days. GRWG carries an average trailing four-quarter earnings surprise of 4.64% and maintains a Zacks Rank of #2.

The Margin Pressure Reality

Industry participants face genuine headwinds from rising labor, packaging, and distribution costs. Animal product producers have contended with elevated feed ingredient prices, though recent moderation provides some relief. However, a persistently tight labor market continues pushing wage structures higher while distribution network costs remain elevated. Companies are implementing pricing actions and cost reduction initiatives to preserve margins amid these pressures.

Tariff uncertainty and retaliatory trade measures present ongoing challenges that require active management and strategic planning.

Bottom Line

The Agriculture - Products industry operates at the confluence of powerful secular trends: population growth, evolving consumer preferences toward healthy food consumption, technological innovation in cultivation methods, and regulatory shifts enabling new product categories. Valuation metrics suggest the sector trades at a meaningful discount to broader markets, potentially offering opportunity for patient capital. Bunge and GrowGeneration represent two distinctly different yet complementary opportunities to participate in this industry transformation.