The one industry I'm most excited about for 2017…
As I predicted last year, 2016 was a year of consolidation. Our market went nowhere. But shares are much cheaper today than they were a year ago.
And that makes me optimistic about 2017.
But there's one industry in particular that I've got my eyes on.
It was arguably the worst sector for 2016.
One of the worst droughts in decades hit South Africa. Farmers lost crops and livestock.
They didn't buy fertiliser or new tractors and machinery.
But 2017 is set to be a much better year for this industry.
Thanks to the rain, 2017 could see maize crops nearly DOUBLE
In 2016, farmers planted a much smaller area than previous years because of the drought.
This saw South Africa’s maize crop come in around 7-8 million tons in the 2015/2016 season.
But thanks to much higher rainfall this November and December the 2016/2017 season is expected to be much better.
The crop is expected to come in at 12 million tons this year. And expectations are that good rains in February and March could push this harvest up to 14 million tons.
So, at a rough 6 million tons extra – and at an average maize price of R3000/ton that means an additional R18 billion that’ll come into the South African economy.
That means higher expenditure from farmers on fertilizer and equipment. This’ll also mean we’ll move from being an importer of maize to a net exporter again – and with that a drop in the maize price. It also means stronger economic growth in South Africa during 2017.
Most importantly it means there are opportunities for you to profit…
Three shares set to profit from the agri-trend in 2017
Top Share to Buy # 1 – Rolfes Technology Holdings
Rolfes has an agricultural fertilizers business. It supplies fertilizer and chemicals to the agricultural industry. Whilst it held its own in 2016, I expect this business to see strong growth in 2017. This’ll help the company, that’s already growing profits at around 35% a year to grow consistently. I expect the share could double within the next 12-24 months from its current R5 to R10 or more.
Top Share to Buy # 2 – Zeder Investments
Zeder’s single largest investment is in Pioneer Foods. This includes brands such as Weetbix and Sasko bread. Both companies that’ll benefit from lower grain prices. Zeder’s also invested in Kaap Agri (supplier of equipment and materials to farmers), Capespan (a large fruit exporter) and Zaad (supplier of seeds to farmers). These companies are all bound to perform when the agricultural sector does well.
Top Share to Buy # 3 – Quantum Food Holdings
Poultry companies have been hard hit. 2016 saw feed costs soar because of the high maize price. In addition to this, imports of cheap poultry from Netherlands, Brazil and the USA also damaged profit margins.
With lower feed costs half of the problem will be solved in 2017.
The other part of the problem has been partially addressed with a 13.9% tariff on EU poultry imports.
That said – I like Quantum Food because it’s moving away from just selling poultry meat into becoming an egg producer. That means it is much less affected by imports – and can control it’s selling price much better.
Here’s to unleashing real value