As we have been saying around here for months, food is becoming very hot in the emerging world and throughout the globe. Wall Street is just now catching on. UBS raised its targets on a number of key food names, revealing that the giant Swiss bank thinks these stocks could rise by 11% to 40% over the near term.
Still, while the targets are rising, UBS is keeping most of its ratings on these stocks right where they are. This usually reflects a case where the analyst is stubbornly refusing to acknowledge anything beyond the fact that a stock or sector has run up farther than he or she thought it would.
UBS now thinks potash producer Agrium (AGU) -- the only true "buy" in this list, as far as the bank is concerned -- will hit $95 a share in the near future. This makes a certain sense, given the strong bid that the entire potash group has received in the wake of recent M&A buzz.
Farm equipment makers CNH Global (CNH) and Deere (DE) will reach $40 and $75, respectively, in the bank's estimates. And even tractor maker AGCO , which UBS rates as a "sell," could jump 12% to $36, according to the latest estimates. We are not bullish on the tractor names -- it sounds like UBS is not either. Soft commodities like sugar are a better bet at this point.