5 Stocks With Monster Profit Potential

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If you think the world has too many people now, just wait. According to the United Nations, the world's population is projected to grow an additional 44% through 2100.

Although this may be alarming from an environmental perspective, it's fantastic news for investors, as it virtually guarantees global economic growth for our lifetimes. The question is how to play it profitably.

My recommendation is to invest in any of the five agricultural companies listed below. With an additional 3 billion mouths to feed by the end of the century, and a continued increase in daily global per capita calorie consumption, these companies should do very well.

1. PotashCorp (NYS: POT)
PotashCorp is the world's largest supplier of potassium compounds commonly called... wait for it... potash, a fertilizer component that helps increase farmers' crop yields. The company enjoys a strong competitive position in its industry, as potash is produced in only 12 countries globally, and a new potash mine costs about $4 billion to build according to SmartMoney magazine. Not to mention, its stock trades for only 13 times earnings.

2. Monsanto (NYS: MON)
Often viewed as the agricultural equivalent of Dr. Evil, the primarily herbicide and genetically modified seed company continued to blow away earnings estimates today. As fellow Fool Alex Planes noted earlier, its most recent earnings per share clocked in at $0.23, compared to estimates of $0.16. And while the stock trades at a higher earnings multiple than PotashCorp, at nearly 26, its iron grip on the genetically modified seed market will pay off handsomely as the world's hunger for food continues to grow.

3. CVR Partners (NYS: UAN)
Like PotashCorp, CVR Partners is one of the world's leading fertilizer companies. Its specialty lies in urea ammonium nitrate and other ammonium fertilizers, which are a must for many agricultural producers. In its latest earnings release, covered by Fool Vibhuti Shah, the company reported net income of $36.3 million compared to $13.5 million in the same period a year ago. And its sales rocketed upward from $46.6 million a year ago to $77.2 million this year.

4. Terra Nitrogen (NYS: TNH)
Selected by Fool Neha Chamaria as one of her top three fertilizer picks, Terra Nitrogen produces and sells nitrogen fertilizer products for agricultural and industrial applications. To say that 2011 was a good year for the company would be an understatement. In the first nine months of the year, its sales surged by 42% on a year-over-year basis, while net profits shot up by a staggering 178%. And to top it off, the company pays a monster 8.8% dividend yield.

5. Yongye International (NAS: YONG)
As its name likely implies, this Chinese agricultural company's biggest asset is also its biggest liability. Namely, that it's based in China. As Neha similarly noted, Yongye's shares were beaten into submission in 2011 due to the market's recent skepticism of publically traded Chinese companies. If its numbers are to be believed, however, then investors may be missing out on a huge opportunity here. In the third quarter of last year, for example, Yongye's revenue increased by almost 96% from the year ago period -- almost 21% of which came from new provincial markets that the company had been cultivating for a number of months. Despite the risk, in turn, this may be a company you want to keep on your radar, as the future demand for food in China should continue to accelerate as more and more of its citizens are lifted out of abject poverty.

Plant your seed now
While nothing in this world is certain -- except death and taxes, according to Benjamin Franklin -- these five companies give your portfolio a fighting chance of a solid performance over years to come. For another great recommendation courtesy of our analysts, take a look at our recently released free report "The Motley Fool's Top Stock for 2012." To access this limited-time report while it's still available, click here now -- it's free.

At the time this article was published Contributing Fool John Maxfield does not own shares in any of the companies mentioned above. The Motley Fool owns shares of Yongye International.Motley Fool newsletter serviceshave recommended buying shares of Yongye International.Motley Fool newsletter serviceshave recommended creating a synthetic long position in Monsanto. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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