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Cheap shares: I’d invest like Jim Rogers with these agriculture stocks

Kirsteen Mackay
·3-min read
Image of person checking their shares portfolio on mobile phone and computer
Image of person checking their shares portfolio on mobile phone and computer

Jim Rogers is a successful stock market investor with a high profile. He shot to fame in the 1970s after founding the incredibly successful Quantum Fund with billionaire investor George Soros. Talking recently about the 2020 pandemic and its effect on the global economy, Rogers said it’s the worst economic time in his lifetime (he’s 78). He remains bullish on gold and silver but has no interest in cryptocurrency and believes Bitcoin will ultimately be worthless.

Jim Rogers likes agriculture stocks

Although an upbeat publicity-hound, and successful investor, Rogers is a perpetual bear when it comes to the markets. Still, one area he’s always maintained an interest in investing in is agriculture. That’s because we’ve all got to eat, no matter what kind of shape the world is in.

Through good times and bad, food is a necessity and that won’t change. However, in recent years agricultural markets have suffered, particularly during 2020, as supply chains crumbled and lockdowns hampered the food chain. Jim Rogers sees this as a perfect opportunity to snap up cheap shares to hold for the long term.

Anglo-Eastern Plantations share price surges

So how do I use Jim Rogers’ investing advice? I begin by researching agriculture stocks.

One UK agriculture stock I’ve been considering is Anglo-Eastern Plantations (LSE: AEP). After plummeting 45% in the March market crash, the Anglo-Eastern Plantations share price has almost retraced to its January highs. Now riding the November rally, it’s up 16% this month alone.

It released its Q3 trading update last week. The group reported a strong balance sheet, a reduction in debt and net cash balance of $90.2m, up 11% year-on-year. Its production of fresh fruit bunches for the first nine months of the year increased by 6% but total crude palm oil production was slightly down on 2019. The price of crude palm oil has rocketed up 26% due to the effects of Covid-19 on the economy.

Anglo-Eastern Plantations constructed its fourth biogas plant in North Sumatra, but can’t sell excess electricity until the pandemic is brought under control in the region.

While the increasing crude palm oil price looks set to continue, recurring Covid-19 waves may keep demand suppressed. Yet the potential for a widespread vaccine rollout gives rise to hope. Anglo-Eastern Plantations has a price-to-earnings ratio (P/E) of 18 and earnings per share are 31p.

This stock has short-term risk, but it could have further upside, and I’d consider buying in the next dip.

Cheap share with added income

Carr’s Group is another UK agriculture stock I think might attract Jim Rogers’ interest. It operates internationally and has several divisions. Its offerings include livestock supplementation products, animal feeds and fuels. Besides these, it sells farm machinery, clothing, and pet supplies through its retail locations. It also has an engineering division servicing the defence, pharma, and energy sectors.

Carr’s agricultural division has not been overly affected by the pandemic, and although the low oil price and lockdowns have slightly hampered its engineering arm, I think this will resume with rigour once we bring the pandemic under control. Carr’s P/E is below 9 and its EPS is 13p. It also has a reasonable dividend yield of 4%. I like how diversified it is and would consider adding it to a long-term portfolio.

The post Cheap shares: I’d invest like Jim Rogers with these agriculture stocks appeared first on The Motley Fool UK.

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Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2020