The demand for fertilizers has remained relatively stable even  as COVID-19 pandemic-led restrictions impacted the fertilizer market thanks to a growing global population and dietary shifts in emerging economies. These factors are  driving the demand for food higher, and with it an increasing demand for fertilizers.

According to a Global Market Insights report, the global fertilizer market is expected to reach $210 billion by 2027. This year, the prices of fertilizers, primarily phosphates and urea, surged due to soaring demand and higher input costs. Moreover, according to World Bank Blogs, fertilizer prices are expected to stay high through the remainder of the year.

So, we think it could be wise to scoop up the shares of fundamentally strong fertilizer stocks Nutrien Ltd. (NTR), The Mosaic Company (MOS), and ICL Group Ltd (ICL). They are expected to generate significant returns in the coming months based on their solid financials.

Nutrien Ltd. (NTR)

Headquartered in Saskatoon, Canada, NTR offers crop inputs, services, and solutions through roughly 2,000 retail locations in the United States, Canada, South America, and Australia. It operates through four segments: Retail Ag Solutions; Potash; Nitrogen; and Phosphate.

In late July,  NTR formed  a partnership with EXMAR to develop and build a low-carbon, ammonia-fueled vessel jointly. Raef Sully, the company’s Executive Vice President and CEO of Nitrogen and Phosphate, said, “This initiative demonstrates how we are taking action to achieve our Feeding the Future Plan’s 2030 sustainability commitments, which include investing in low-carbon ammonia innovations.”

NTR’s total revenues increased 15.8% year-over-year to $9.76 billion for the second quarter, ended June 30, 2021. Its gross margin came in at $2.88 billion, up 32.9% year-over-year. Its net earnings increased 45.5% year-over-year to $1.11 billion, while its EPS was  $1.94, up 44.8% year-over-year.

For fiscal 2021, NTR’s revenue and EPS are expected to grow 24.6% and 173.5%, respectively, year-over-year to $24.98 billion and $4.92. In addition, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 54.5% in price to close Friday’s trading session at $63.05.

It’s no surprise that NTR has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

In addition, the stock has a B grade for Sentiment. NTR is ranked #6 out of 32 stocks in the Agriculture industry. Click here to see the additional POWR Ratings for NTR (Stability, Value, Growth, Quality, and Momentum).

The Mosaic Company (MOS)

One of the world’s leading integrated producers of concentrated phosphate and potash, MOS serves customers in roughly 40 countries. The Plymouth, Minn.-based company operates through three segments: Phosphates; Potash; and Mosaic Fertilizantes.

Last month, MOS’ Board of Directors had approved a new $1 billion share repurchase program. In addition, the company completed a previously announced early redemption of $450 million in notes that were due November 2021, representing its first step toward  its goal of retiring $1 billion of debt over time. These measures are expected to help MOS further strengthen its balance sheet.

For the second quarter, ended June 30, 2021, MOS’ net sales increased 37% year-over-year to $2.80 billion. The company’s gross profit came in at $752.30 million, up 192.7% year-over-year. Its net income was  $437.20 million, up 822.4% year-over-year. Also, its adjusted EPS came in at $1.14, up 850% year-over-year.

MOS’ revenue is expected to grow 40.5% year-over-year to $12.20 billion in its fiscal year 2021. Its EPS is estimated to grow 434.1% year-over-year to $4.54 in the current year. Also, it surpassed the Street’s  EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 74.5% in price to close Friday’s trading session at $33.61.

MOS’ POWR ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth, and a B grade for Value.

MOS is ranked #7 in the Agriculture industry. Click here to see MOS’ ratings for Stability, Momentum, Sentiment, and Quality.

ICL Group Ltd (ICL)

Headquartered in Tel Aviv, Israel, ICL functions as a specialty minerals and chemicals company. It operates in four segments: Industrial Products; Potash; Phosphate Solutions; and Innovative Ag Solutions (IAS).

ICL announced on August 30 that it is now able to offer a complete range of mono ammonium phosphate (MAP) solutions from its YPH joint venture plant in China to  meet the growing demand from the Electric Vehicle (EV) battery market. This development is  expected to help increase the company’s revenues.

ICL’s total revenue increased 34.4% year-over-year to $1.62 billion for its fiscal second quarter, ended June 30, 2021. The company’s gross profit was  $570 million, up 78.1% year-over-year. Its net income came in at $140 million, compared to a $168 million loss in the prior-year quarter. Also, its EPS came in at $0.11, compared to a $0.13  loss in the year-ago period.

Analysts expect ICL’s revenue to be $6.67 billion in its fiscal year 2022, representing a 3.9% year-over-year rise. In addition, the company’s EPS is expected to increase 8.5% year-over-year to $0.51 in the next year. It  surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 100.8% in price to close Friday’s trading session at $7.23.

ICL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system.

In addition, ICL has a B grade for Value, Stability, Growth, Quality, and Sentiment. Within the A-rated Chemicals industry, it is ranked #3 of 94 stocks. Also, click here to see the additional POWR Rating for Momentum for ICL.

NTR shares were trading at $61.49 per share on Monday morning, down $1.56 (-2.47%). Year-to-date, NTR has gained 27.68%, versus a 16.98% 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. More...

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