Buy Bunge Limited as it retraces 50% amid robust crop margins

As the Ukrainian crisis continues, Bunge Limited (NYSE:BG) is among the stocks benefiting. Year-to-date, the stock has returned almost 27% as of press time, taking total gains in one year to 38%. Higher margins following the Ukrainian war have fueled the strong returns.

Bunge is an agribusiness and food trading company. Due to its area of operation, the high demand for grains in the global market has fueled its rise. In its Q1 2022 results on April 27, Bunge reported sales of $11.23 billion, compared to $9.79 billion in the prior year.

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Bunge’s major unit, Agribusiness, posted an almost 15% increase in sales. This followed strong demand in Europe, Brazil, and the US. The unit had a 7% drop in volumes, reflecting disruptions of the global grain markets by the Ukrainian war.

Going forward, Bunge is set to benefit from the rising crop prices due to disruptions from the war. The company recognized this in its guidance of $11.50 per share in FY22, compared to the previous $9.50. The guidance also reflects higher margins from a lower supply of crops due to poor weather in South America.

Bunge stock retreats after hitting $128

Technically, Bunge Limited is on a solid uptrend which started in late December. The stock has retraced 50% after touching a high of $128. The retracement met the upward trendline, with the stock aiming for the $128 level again. The level is slightly lower than $130, which analysts at JPMorgan expect the stock to reach.

Concluding thoughts

Bunge Limited has a strong bullish potential. The stock is benefiting from robust crop margins. The current stock retracement is an opportunity to buy, aiming for $128. Analysts have a $130 target, but the stock could even go higher if the current demand-supply imbalance persists.

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