Play it Safe: Farming Equipment

The world's population is growing fast, but the amount of land to grow food is not. So, as simple supply and demand economics would dictate, food prices are rising. According to the United Nations, grain prices have more than doubled since 2003, and some analysts expect them to continue rising for the foreseeable future. That trend could be a boon to American farmers, and when farmers feel rich, they often shop for new equipment. Gary Bradshaw, a portfolio manager for the Hodges family of mutual funds, likes Titan Machinery (TITN), a distributor of tractors in the Great Plains. Titan's 2011 net income was $44 million, nearly double what it was in 2010. For a more international bet on farming, Bradshaw also likes Deere (DE) . The Moline, Ill., maker of giant green tractors and other big-ticket farm equipment grew its net income by 56 percent in four years, from $1.8 billion in 2007 to $2.8 billion last year.

Go for Broke: A Chicken Run

If the rest of the world is going to eat more food, it surely will eat more chicken, right? U.S. chicken-piece prices have risen anywhere from 2 percent (breasts) to more than 120 percent (wings) from a year ago. But buying into poultry is a lot riskier than taking a flier on most other farm-related businesses. Because prices have been so good, chicken firms could produce a lot more birds. "The danger is you drive prices lower," says Heather Jones, a managing director at BB&T Capital Markets. Plus, higher crop prices pose a problem: Sanderson Farms (SAFM), the nation's No. 3 chicken producer, says its feed costs (primarily corn and soybeans) were nearly 40 percent higher last year than in 2010. Still, chicken producers have made their operations more efficient, and they've steadily increased exports to Asia and Europe. Bradshaw says he'd consider buying Pilgrim's Pride (PPC), another major chicken producer, if its stock price dipped.