Looking at the gloomy outlook for the farming sector, the best advice for investors putting money into agribusiness is probably: "Don't".
Share prices in the sector continue to drift lower, testing new 12-month lows.
Some are even below the levels of five years ago. Elders (ASX code ELD) is just one example.
On Thursday last week ELD sank to $5.46 a share; on October 8, 2018, the price was $7.16.
Of course in May last year, you could have sold them for around $14.50 each if you got the timing right, but that is no compensation for those who missed the peak.
Elders has a finger in almost every slice of the ag pie, so when farmers sneeze, the folk in the pink shirts catch a cold.
Olive oil giant Cobram Estate (CBO) were a whisker under $2 five years ago - now they are around $1.40. Almond grower Select Harvests (SHV) was $5.25, now $4.
AACo (AAC) is little better - $1.26 a share last week and $1.20 the same time five years ago. Since the cattle giant doesn't pay a dividend, you would have to say leaving the money in a bank deposit makes more sense.
What does make sense is riding the cycle, for those with the intestinal fortitude. Anyone who sold ELD, AAC, or SHV around May or June last year would have done quite nicely, thank you.
The question now is whether this is the bottom of the cycle and the time to buy.
With Elders now trading on a projected dividend yield of around seven per cent, and selling for less than six years' earnings, you would have to wonder.
Meanwhile, the Punter has put another favourite back on his watchlist: Nufarm (NUF).
However, he has decided against taking up his rights to buy more shares in would-be phosphate producer Trigg Minerals (TMG), despite the sweetener of free options. TMG is still trading below the share offer price of 1.2c.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
