Lingering logistic disruptions continue to mar the optimal productivity of the fertilizer industry. However, lucrative federal initiatives might boost the sector in the upcoming terms. With assistance from the Inflation Reduction Act, the U.S. Department of Agriculture aims to address future fertilizer availability and cost challenges for domestic producers.
Moreover, demand for fertilizers is projected to surge with the rising demand for food amid an expanding global population. According to Vantage Market Research, the global fertilizer market size is projected to grow at a CAGR of 2.3% from 2022 to 2028.
Therefore, we think it could be wise to scoop up the shares of fundamentally sound fertilizer stocks Nutrien Ltd. (NTR), CF Industries Holdings, Inc. (CF), and Mosaic Company (MOS) to grow your portfolio.
Nutrien Ltd. (NTR)
Headquartered in Saskatoon, Canada, NTR is the largest crop inputs, services, and solutions provider. It offers potash, nitrogen, phosphate, sulfate products, and financial solutions. Also, it distributes crop nutrients, crop protection products, seeds, and merchandise products through 2,000 retail locations in the U.S., Canada, Australia, and South America.
On July 20, 2022, NTR announced that it had entered into an agreement to acquire Brazilian company Casa do Adubo S.A. By completing the acquisition, NTR expects to surpass its estimated target of $100 million adjusted EBITDA in Brazil by 2023.
NTR’s sales came in at $14.51 billion for the second quarter ended June 30, 2022, up 48.6% year-over-year. Its net earnings increased 223.5% year-over-year to $3.60 billion. Moreover, the company’s EPS increased 235.6% year-over-year to $6.51.
Analysts expect NTR’s revenue to increase 48.2% year-over-year to $39.81 billion in the current year. Its EPS is estimated to increase 169.8% year-over-year to $16.81 in 2022. It surpassed EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 54.4% to close the last trading session at $91.58.
NTR’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NTR has a B grade in Value, Growth, Momentum, and Quality. Within the Agriculture industry, it is ranked #3 out of 31 stocks. Click here to see the additional POWR Ratings for Sentiment and Stability for NTR.
CF Industries Holdings, Inc. (CF)
CF produces and sells hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities worldwide. It primarily serves cooperatives, independent fertilizer distributors, traders, wholesalers, and industrial users.
On May 3, 2022, CF and Mitsui & Co., Ltd., one of the leading ammonia marketers in the world, announced their agreement to co-develop a greenfield ammonia production facility in the United States. This collaboration marks a step forward toward its sustainability targets.
CF’s net sales came in at $3.39 billion for the quarter ended June 30, 2022, up 113.4% year-over-year. Its net earnings increased 373.6% year-over-year to $1.17 billion. Moreover, the company’s adjusted EBITDA increased 226% year-over-year to $1.95 billion.
Street expects CF’s revenue to increase 77.1% year-over-year to $11.58 billion in the current year. Its EPS is estimated to increase 319.3% year-over-year to $17.78 in 2022. Over the past year, the stock has gained 137.5% to close the last trading session at $105.64.
CF has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade in Quality and a B for Growth and Momentum. It is ranked #6 in the same industry. We’ve also rated CF for Sentiment, Stability, and Value. Get all CF ratings here.
The Mosaic Company (MOS)
MOS and its subsidiaries manufacture and sell concentrated phosphate and potash crop nutrients in North America and other countries. Its segments are Phosphates; Potash; and Mosaic Fertilizantes.
On August 1, 2022, Joc O’Rourke, President and CEO, said, “We are expanding production to help meet global demand and returning significant capital to shareholders. We expect strong fundamentals will continue for the rest of the year and into 2023.”
MOS’s net sales came in at $5.37 billion for the second quarter ended June 30, 2022, up 91.8% year-over-year. Its net earnings increased 136.9% year-over-year to $1.04 billion. Moreover, the company’s EPS came in at $2.85, up 150% year-over-year.
MOS’s revenue is expected to increase 66.3% year-over-year to $20.55 billion in the current year. Its EPS is estimated to increase 165.9% year-over-year to $13.40 in 2022. Over the past year, the stock has gained 80.2% to close the last trading session at $55.36.
MOS has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Growth and a B for Value, Quality, and Momentum. It is ranked #5 in the Agriculture industry.
Beyond what is stated above, we’ve also rated MOS for Sentiment and Stability. Get all MOS ratings here.
NTR shares were trading at $95.52 per share on Tuesday afternoon, up $3.94 (+4.30%). Year-to-date, NTR has gained 28.35%, versus a -12.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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