The lingering supply chain disruptions in the fertilizer industry due to the ongoing war between Russia and Ukraine have resulted in price pressure and diminished availability of fertilizer for global agricultural producers this year.

However, to combat price hikes caused by the eastern European geopolitical crisis and to boost American fertilizer production, the U.S. Department of Agriculture (USDA) announced $500 million in grants.

Furthermore, the demand for fertilizer is likely to increase in the near term, with rising demand for food, induced by the expanding global population. As per a report published by Spherical Insights & Consulting, the global fertilizer market size is projected to grow from $182.20 billion in 2021 to $254.87 billion by 2030 at a CAGR of 3.9%.

Therefore, it would be wise to add fundamentally strong fertilizer stocks Nutrien Ltd. (NTR), CF Industries Holdings, Inc. (CF), and The Mosaic Company (MOS) to weather the storm.

Nutrien Ltd. (NTR)

Headquartered in Saskatoon, Canada, NTR is a crop inputs, services, and solutions provider, offering potash, nitrogen, phosphate, sulfate products, and financial solutions. In addition, it also distributes crop nutrients, crop protection products, seeds, and merchandise products.

On November 3, NTR announced that its Board of Directors had declared a quarterly dividend of $0.48 per share, payable to shareholders on January 13, 2023. This reflects upon the company’s strong cash generation ability.

In July, NTR announced that it had entered into an agreement to acquire Brazilian company Casa do Adubo S.A. Upon completion of the acquisition, NTR expects to surpass its estimated target of $100 million adjusted EBITDA in Brazil by 2023.

NTR’s sales came in at $8.19 billion for the third quarter ended September 30, 2022, up 35.9% year-over-year. Its net earnings increased 118% year-over-year to $1.58 billion. Moreover, the company’s adjusted net earnings per share increased 81.9% year-over-year to $2.51.

Analysts expect NTR’s revenue to increase 8.3% year-over-year to $7.65 billion in the fourth fiscal quarter ending December 2022. Its EPS is estimated to increase 13.3% year-over-year to $2.80 for the same quarter.

Over the past year, the stock has gained 9.5% to close the last trading session at $73.29. It has gained 2.8% intraday.

NTR’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to a 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, and Quality. Within the Agriculture industry, it is ranked #5 out of 31 stocks. Click here to see the additional POWR Ratings for Sentiment, Momentum, 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. The company mainly serves cooperatives, independent fertilizer distributors, traders, wholesalers, and industrial users.

On October 12, it was announced that CF had entered into a commercial agreement with Exxon Mobil Corporation (XOM) to capture and permanently store up to two million metric tons of CO2 emissions annually from its manufacturing complex in Louisiana. This should support CF’s decarbonization goals.

On the same day, CF declared a $0.40 per share dividend on its common stock. The dividend is payable to shareholders on November 30, 2022. This reflects on the company’s ability to pay back its shareholders.

For the fiscal third quarter ended September 30, CF’s net sales came in at $2.32 billion, up 70.4% year-over-year. Its net earnings attributable to common stockholders increased 336.8% from the prior-year period to $438 million. Adjusted EBITDA increased 101.4% from the same period last year to $983 million.

For the fourth fiscal quarter ending December 2022, Street expects CF’s revenue to increase 13.5% year-over-year to $2.88 billion. Its EPS is estimated to increase 23.9% year-over-year to $4.37 for the same period.

Over the past year, the stock has gained 78% to close the last trading session at $105.38. It has gained 48.9% year-to-date.

CF has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade in Quality. It is ranked #10 in the Agriculture industry.

Click here to get additional ratings of CF for Sentiment, Stability, Value, Growth, and Momentum.

The Mosaic Company (MOS)

MOS and its subsidiaries manufacture and sell concentrated phosphate and potash crop nutrients globally. The company operates through its three broad segments of Phosphates; Potash; and Mosaic Fertilizantes.

On October 19, MOS announced a quarterly dividend of $0.15 per share on its common stock. The dividend is expected to be paid to shareholders on December 15, 2022. This underscores the company’s shareholder return ability.

MOS’ net sales came in at $5.37 billion for the second quarter ended June 30, 2022, up 91.8% year-over-year. Net earnings attributable to Mosaic increased 136.9% year-over-year to $1.04 billion. Moreover, adjusted net income per share attributable to Mosaic came in at $3.64, up 211.1% year-over-year.

MOS’ revenue is expected to increase 31.1% year-over-year to $5.03 billion for the fiscal fourth quarter ending December 2022. Its EPS is estimated to increase 71.4% year-over-year to $3.34 for the same period.

The stock has gained 25.5% year-to-date to close the last trading session at $49.29. It has gained 32% over the past year.

MOS’ strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, equating to a Buy in our proprietary rating system. The stock has an A grade for Growth and a B for Value and Quality. Within the same industry, it is ranked #6.

Beyond what is stated above, we’ve also rated MOS for Sentiment, Momentum, and Stability. Click here to see all the POWR Ratings of MOS.

NTR shares were trading at $73.14 per share on Monday afternoon, down $0.15 (-0.20%). Year-to-date, NTR has declined -0.60%, versus a -19.64% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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