3 Stock Picks to Ride the Vertical Farming Wave

Jeremy Flint

March 1, 2024 4 min read

Many agricultural stocks are looking upward to vertical farming to expand their market share and income opportunities. Vertical farming describes a range of techniques that, rather than letting produce and plants grow across the ground, create tiered or towered platforms to grow upward.

As food scarcity increases alongside tighter living conditions, vertical farming is emerging as a cost-effective, space-saving method to increase food production. The global market currently sits at around $8 billion worldwide but is expected to grow rapidly and hit $35 billion or more in 2032. These three companies are among the top vertical farming stocks at the fore of a growing industry and may offer the best chance to invest in agriculture’s future.

Hydrofarm Holdings (HYFM)

Man works in a greenhouse hydrofarm nursery. HYFM stock.

Source: tong patong / Shutterstock

Hydrofarm Holdings (NASDAQ:HYFM) specializes in producing and distributing hydroponic equipment and supplies tailored for controlled environment agriculture, including vertical farming. The company’s lineup features high-intensity grow lights, climate control systems, and various growing mediums. Targeting the wholesale market, Hydrofarm distributes its offerings across eight North American facilities.

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Hydrofarm Holdings has been on an acquisition spree in its strategy to enhance its market footprint, integrating companies that produce peripheral products like plant nutrients. This strategy aims to leverage Hydrofarm’s expanding scale and financial capabilities to unify the fragmented market of controlled environment agriculture equipment and supplies. By doing so, Hydrofarm seeks to capture a larger market share and support the burgeoning vertical farming sector by supplying essential tools for continuous food production growth.

The company is in rough shape right now, posting a $0.27 loss per share in its most recent quarterly report. Still, Hydrofarm Holdings has a strategic plan to maximize vertical farming opportunities while exploring additional agricultural inroads.

Local Bounti Corp (LOCL)

Hydroponic indoor vegetable plant factory in exhibition space warehouse.

Source: Nikolay_E / Shutterstock.com

Local Bounti Corp (NYSE:LOCL) brands itself as “The Farm of the Future,” solidifying its status among emerging vertical farming stocks. Operating greenhouse-based agriculture, Local Bounti lets consumers access off-season produce year-round. Importantly, the company plays a significant role in meeting the growing demands for sustainability, as its operations consume 90% less water and land compared to conventional farming, all while prioritizing a “local first” approach to expansion.

Local Bounti marked a major win this month after the U.S. Patent Office approved a patent for its Stack & Flow Technology, which underpins its vertical farming efforts. Stack & Flow combines next-gen greenhouse farming techniques with vertical farming tech to improve production and optimize limited space availability – letting Local Bounti “do more with less” while improving profit margins. Another win this month came after a $15 million cash infusion to improve its capital structure and right-size financial operations in light of ongoing interest rate concerns.

Village Farms International (VFF)

Hydroponics,Organic fresh harvested vegetables

Source: bluedog studio / Shutterstock.com

Village Farms International (NASDAQ:VFF) is a unique vertical farming stock opportunity offering diversified entry into agriculture and cannabis markets. As an agricultural greenhouse operator, VFF cultivates tomatoes, cucumbers, and other produce using cutting-edge facilities primarily through its main subsidiary. Its dedication to clean energy and sustainable agriculture positions VFF as an attractive investment choice, poised to benefit from the worldwide surge in eco-consciousness and sustainable practices.

But Village Farms doesn’t just excel in vertical vegetable farming. The company also runs Pure Sunfarms, a subsidiary that produces and markets an array of cannabis products, including edibles. Diversified revenue sources combined with innovative farming techniques position Village Farms as a leading choice among vertical farming stocks. Today, Village Farms is part of a lobby targeting Canadian cannabis tax reform in a bid to improve production, increase cash flow, and create more jobs (while fighting illegal trade). Tax reform will be a major, much-needed boon to Village Farms’ bottom line.

On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.