Soaring fertilizer prices have been worrying farmers. The Green Markets North American Fertilizer Price Index increased by 4.4% to hit $1,094.35 per short ton on November 12, 2021, surpassing the $1,048.23 per short ton previous high set the week before. Farmers are unable and unwilling to soak up the price hikes as they set their sights on shifting to other less fertilizer-intensive crops.
Meanwhile, natural gas prices in Europe and Asia have skyrocketed to record highs due to low storage levels and supply constraints. This is contributing to increasing fertilizer prices. Natural gas is a necessary raw material for making nitrogen fertilizers like ammonia, urea, and nitrates. In addition, China has restricted its fertilizer exports until June 2022 to maintain domestic availability. So, fertilizer prices are expected to remain high amid demand-supply imbalances.
Therefore, we think it could be wise to scoop up quality fertilizer stocks Nutrien Ltd. (NTR), The Mosaic Company (MOS), and Intrepid Potash, Inc. (IPI) to capitalize on the rising fertilizer prices due to the supply constraints.
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 29, 2021, NTR signed a collaboration agreement with EXMAR to jointly develop and build a low-carbon, ammonia-fueled vessel. This agreement is expected to help NTR realize its goal of reducing its maritime transportation emissions by the International Maritime Organization’s (IMO)2050 deadline and enable the commercial development of an ammonia-fueled vessel.
NTR’s sales for its fiscal third quarter, ended September 30, 2021, increased 43% year-over-year to $6.02 billion. The company’s adjusted EBITDA increased 145% year-over-year to $1.64 billion, while its free cash flow increased 208% to $862 million.
Analysts expect NTR’s revenues and EPS for its fiscal year 2022 to increase 10.9% and 25.5% year-over-year to $29.12 billion and $7.48, respectively. Over the past year, the stock has gained 54% in price to close yesterday’s trading session at $69.07.
NTR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The Mosaic Company (MOS)
Plymouth, Minn.-based MOS is a producer and marketer of concentrated phosphate and potash crop nutrients. It operates through the phosphates; potash; and mosaic fertilizantes segments. The company also operates crop nutrient blending and bagging facilities, port terminals, and warehouses in Brazil and Paraguay. It serves customers in approximately 40 countries.
For its fiscal third quarter, ended September 30, 2021, MOS’ revenues increased 44% year-over-year to $3.40 billion. The company’s operating earnings rose 612.2% year-over-year to $701.60 million. Its net earnings came in at $371.90 million, versus a $6.20 million net loss in the year-ago period. Also, its EPS was $0.97 compared to a $0.02 loss in the prior-year quarter.
MOS’ revenue for the quarter ending December 31, 2021, is expected to increase 52% year-over-year to $3.74 billion. Its EPS for its fiscal 2021 is expected to increase 511.8% year-over-year to $5.20. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 91.9% in price over the past year to close yesterday’s trading session at $36.82.
MOS’ POWR Ratings reflect this promising outlook. The stock has a B grade for Value and Momentum. It is ranked #9 in the Agriculture industry. To check the additional ratings of MOS for Growth, Stability, Sentiment, and Quality, click here.
Intrepid Potash, Inc. (IPI)
IPI operates through the potash; oilfield solutions; and the specialty fertilizer trio segments. The Denver, Colo., company delivers potassium, magnesium, sulfur, salt, and water products to agriculture, animal feed, and the oil and gas industries. Moreover, it is the only producer of muriate of potash in the U.S.
IPI’s sales for the quarter ended September 30, 2021, increased 55.3% year-over-year to $59.15 million. The company’s gross margin came in at $10.60 million, versus a gross deficit of $0.30 million in the year-ago period. Its net income came in at $4.02 million compared to a $10.17 million net loss in the prior-year quarter.
Analysts expect IPI’s EPS for the quarter ending December 31, 2021, to increase 2,020% year-over-year to $0.96. Its revenues for its fiscal 2022 are expected to increase 24.2% year-over-year to $302.91 million. It surpassed consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 279.3% to close yesterday’s trading session at $42.03.
It is no surprise that IPI has an overall B rating, which translates to a Buy in our POWR Ratings system. IPI has an A grade for Growth and Momentum, and a B grade for Quality.
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NTR shares were trading at $67.71 per share on Friday morning, down $1.36 (-1.97%). Year-to-date, NTR has gained 42.37%, versus a 26.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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