When All is Said & Done, This May Be the Best Stock Pick of the Decade

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

The world has a major food problem.

Here it is a nutshell: We may not have enough food to feed people by 2050.

Yep. You heard that right. And no, I’m not an alarmist or a pessimist. Rather, I’m a natural optimist – but I’m also realistic about the problem our planet is facing when it comes to an enormous and inevitable food shortage.

There will be nearly 10 BILLION people on Earth by 2050. In order to feed all those people, the United Nations estimates that global food production will need to increase by at least 50% over the next 30 years.

But foods need water to grow, and already, 70% of the world’s freshwater supply is dedicated to agriculture. Plus, the amount of rain that falls down to Earth every year is steadily decreasing thanks to climate change.

Foods also need the “right” temperatures to grow, and steadily rising temperatures across the globe are significantly and adversely impacting crop yields.

And, lastly, foods need land to grow. But, due to climate change, the rate of agricultural soil erosion is up to 100X higher than the rate of agricultural soil formation these days, and 23% of land areas have become less productive farmland because of land degradation.

Folks… if traditional farming does not change… we will need a “second Earth” to feed the world’s population.

And, as the old saying goes, there is no Planet B.

There is only one way forward here. We need to advance traditional farming techniques to be more efficient, more eco-friendly, and less reliant on external conditions.

How? By leveraging technology to create high-tech indoor farming greenhouses.

Indoor farming is nothing new. Growing plants, fruits, and veggies indoors has been a concept as old as time itself. But it wasn’t until recently – thanks to technological advancements in AI, lighting, hydroponics, and automation – that we could create large-scale, high-tech greenhouses which could reliably, effectively, and cheaply feed the planet.

That time has finally arrived.

AgTech startups like Square Roots, Plenty, and AeroFarms are all creating large-scale indoor farming facilities across America to help proactively solve the coming food shortage crisis.

Forget EVs. Forget AI. Forget self-driving cars. THIS is the next big industry.

And yet, no one is talking about it today… which means that you have a unique opportunity to invest in this burgeoning industry first…

Today, we will tell you about the single best stock to buy to play this completely underrated yet world-changing investment megatrend. When all is said and done, we truly believe that today’s stock pick could end up being one of the biggest winners of the 2020s.

The 400-Pound Gorilla in Indoor Farming

Every industry has a titan – a 400-pound gorilla that leveraged certain technological, strategic, and/or financial advantages to dominate the industry at scale.

In electric vehicles, you have Tesla (NASDAQ:TSLA).

In e-commerce, you have Amazon (NASDAQ:AMZN).

In streaming TV, you have Netflix (NASDAQ:NFLX).

In social media, you have Facebook (NASDAQ:FB).

And, in indoor farming, you have AppHarvest (NASDAQ:APPH).

Now, to be clear, AppHarvest is not the 400-pound gorilla in the indoor farming industry yet… but the company has what it takes to one day be the undisputed titan of this transformational industry.

Here’s the story.

AppHarvest is an ag-tech company based in eastern Kentucky that was founded with the vision of creating a series of high-tech farming greenhouses to sustainably feed America.

The company utilizes leading-edge controlled environment agriculture technology to create large-scale hydroponic growing facilities that produce 30X higher yields than traditional farming, while using up to 90% less water (and only recycled rainwater at that).

The facilities are operational all year around, are not dependent on weather, have zero ecological waste from runoff or soil usage, and are entirely U.S.-based (whereas over 50% of all current fruits and vegetables are imported, opening them up to being less fresh and subject to supply chain disruptions).

These facilities are simply a much better way to farm than the status quo.

AppHarvest opened up its first indoor farming facility – a 60-acre facility located in Morehead, Kentucky focused on sustainably growing tomatoes – in late 2020. The facility has been producing vegetables since January.

The company has broken ground on its second and third facilities, both of which are also in Kentucky, and plans to launch an additional nine large-scale hydroponic greenhouses by 2025 – bringing the total number to 12 facilities.

The growth plans here are ambitious. But, if management can execute, then by 2025, AppHarvest will have morphed into the dominating force in the U.S. indoor farming industry.

We have high confidence in management’s ability to execute… for a few reasons.

First off, we like the management team. You have a founder/CEO guy leading the team, who is a homegrown Kentucky product, that went to the University of Kentucky, and whom exudes this feel-good story that investors will want to support, partners will want to work with, and folks will want to work for.

Second, we like the story. AppHarvest is consistently pounding on the table about how they are going to replenish America’s heartland, and give back jobs to the great Appalachian territory that was ravaged once the coal industry went under. Considering the vigor that the “Made in America” and “Bring Jobs Back to America” movements have, this focus on recreating jobs for the middle class and reestablishing supply chains in America should help the company accelerate business momentum. It’s the perfect story, at the perfect time.

Third, we think the technology is hard to replicate. AppHarvest is integrating partner technology solutions – like an AI system from Koidra, LED lights from Philips, energy screens form Svensson, nanobubble tech from Moleaer, and more – in a hard-to-replicate way that creates what we think is a durable performance moat. We do not believe that many other companies will be able to produce as much yield for at little resources as AppHarvest, now or anytime soon.

Fourth, we think there’s a huge geography advantage here. By building its growing facilities in Kentucky, AppHarvest has put its produce within a single day’s drive of 70% of the U.S. population – in an industry where produce is consistently traveling for multiple days across borders.

Fifth, we believe in the Mastronardi advantage. Mastronardi is a leading distributor of produce to grocery stores in America. They’ve already signed a big agreement with AppHarvest, meaning AppHarvest has visible distribution into Kroger, Walmart, Costco, Target, Trader Joe’s, Safeway, Whole Foods, etc.

Sixth, we are fans of the balance sheet. AppHarvest is flush with $464 million in cash on the balance sheet, which is of incredible importance in a capex-intensive industry like indoor farming (the company estimates that each facility will cost ~$100 million to build).

Overall, we think AppHarvest has what it takes to turn into the unrivaled leader in the soon-to-be-huge indoor farming industry – and yet, AppHarvest is worth just $1.5 billion today.

The long-term upside potential here is enormous.

And that’s why AppHarvest stock deserves to be on your buy radar today.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this video.

By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the theme of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative cutting-edge stocks, become a subscriber of Innovation Investor today.

The post When All is Said & Done, This May Be the Best Stock Pick of the Decade appeared first on InvestorPlace.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.