The world continues to suffer severe food shortages, especially of wheat and sunflower oil, thanks to production hold ups by their largest producers—Russia and Ukraine. A decline in fertilizer supply has fostered the global food shortage. The supply-demand imbalance has caused fertilizer prices to skyrocket of late. However, the supply chain bottleneck is expected to ease with federal spending policies. The United States Department of Agriculture (USDA) plans to double its investment in domestic fertilizer production to $500 million.

As demand for food multiplies with the global population rising considerably, the fertilizer industry is also expected to face robust demand. According to Research Dive, the global fertilizer market is projected to grow at a 3.6% CAGR from 2022 to 2030.

Therefore, we think the stocks of fundamentally strong fertilizer companies Nutrien Ltd. (NTR), Yara International ASA (YARIY), and ICL Group Ltd (ICL) could be a solid additions to one’s portfolio now.

Nutrien Ltd. (NTR)

Headquartered in Saskatoon, Canada, NTR provides crop inputs and services. It offers potash, nitrogen, phosphate, sulfate products, and financial solutions. The company distributes crop nutrients, crop protection products, seeds, and merchandise products through approximately 2,000 retail locations in the U.S., Canada, South America, and Australia.

On May 2, 2022, Ken Seitz, NTR’s Interim President, and CEO, said, “We expect to generate higher earnings and cash flows in 2022, which provides an opportunity to accelerate our strategic initiatives that we believe will advance sustainable agriculture practices and create long-term value for all our stakeholders.”

For the first quarter, ended March 31, 2022, NTR’s sales increased 64.4% year-over-year to $7.66 billion. Its net earnings came in at $1.39 billion, up 941.4% year-over-year, while its EPS came in at $2.49, up 1,031.8% year-over-year.

Analysts expect NTR’s revenue to be $40.02 billion in 2022, representing a 49% year-over-year increase. The company’s EPS is estimated to increase 180.3% to $17.46 in 2022. Over the past year, the stock has gained 57.2% in price to close yesterday’s trading session at $95.84.

NTR’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. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

NTR has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #3 of 34 stocks within the Agriculture industry. Click here to see the additional POWR Ratings for NTR (Momentum and Stability).

Yara International ASA (YARIY)

YARIY in Oslo, Norway, provides environmental and industrial solutions in Norway, European Union, Europe, Africa, Asia, North and Latin America, Australia, and New Zealand. The company offers nitrogen-based fertilizers, compound fertilizers, blended products, and foliar and fertigation solutions.

On April 27, 2022, Svein Tore Holsether, YARIY’s President and CEO, said, “Yara’s business model is robust, and is performing well also in a volatile situation. I want to give credit to our employees for their hard work to sustain our operations and deliveries amid war, supply disruption and market price volatility.”

YARIY’s revenue and other income increased 88.2% year-over-year to $5.91 billion for the first quarter, ended March 31, 2022. Its net income came in at $947 million, up 6,664.3% year-over-year, while its EPS came in at $3.71, up 7,320% year-over-year.

Analysts expect YARIY’s revenue to increase 38.7% year-over-year to $22.93 billion for its fiscal period ending Dec.31, 2022. The stock has gained 7.8% in  price over the past nine months to close yesterday’s trading session at $25.94.

YARIY has an overall A rating, which indicates a Strong Buy in our proprietary rating system. It has a B grade for Growth, Value, and Stability. Within the Agriculture industry, YARIY is ranked #2. Click here to see the additional POWR Ratings for Momentum, Sentiment, and Quality for YARIY.

ICL Group Ltd (ICL)

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

On May 11, 2022, Raviv Zoller, ICL’s President and CEO, said, “We continued to focus on long-term cash generation by innovating within our specialty businesses product portfolio and by driving cost efficiencies. We will continue to optimize our customer and supplier relationships, to manage through global supply challenges and to work to ensure consistent and reliable product supply for our customers.”

ICL’s sales for the first quarter, ended March 31, 2022, came in at $2.52 billion, up 67.2% year-over-year. Its net income came in at $632 million, up 368.1% year-over-year, while its EPS was 49 cents, up 345.5% year-over-year. Moreover, its adjusted EBITDA was $1 billion, up 231.8% year-over-year.

For its fiscal year 2022, analysts expect ICL’s revenue to increase 3.9% year-over-year to $6.67 billion. Its EPS is estimated to grow 8.5% to $0.51 in 2022. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 62.8% in price over the past nine months to close yesterday’s session at $11.22.

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.

It has an A grade for Growth and Sentiment and a B grade for Value and Quality. Within the Agriculture industry, it is ranked first. Click here to see the additional POWR Ratings for Momentum and Stability for ICL.

NTR shares were trading at $94.03 per share on Friday afternoon, down $1.81 (-1.89%). Year-to-date, NTR has gained 25.63%, versus a -12.97% 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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