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5 Top Fertilizer Stocks to Buy on Robust Industry Fundamentals
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The fertilizer industry is enjoying a solid run, thanks to strong global demand and surging prices of crop nutrients. Strong agricultural market trends, a rally in crop commodity prices and attractive farm economics are driving demand for fertilizers globally. A tight global supply-demand balance has also boosted fertilizer prices and profit margins of fertilizer stocks. The momentum is expected to continue, backed by strong demand and pricing fundamentals for crop nutrients.
As such, stocks with compelling prospects like Nutrien Ltd. (NTR - Free Report) , The Mosaic Company (MOS - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) , CF Industries Holdings, Inc. (CF - Free Report) and Intrepid Potash, Inc. (IPI - Free Report) are worth adding to your portfolio now.
Fertilizers Riding High on Demand & Pricing Strength
Rallying crop commodity prices and solid farmer economics are spurring demand for major fertilizers such as potash, phosphate and nitrogen. Prices of corn and soybean have surged to multi-year highs. Strong global demand coupled with supply constraints has boosted crop commodity prices. Higher freight, energy and labor costs and raw material shortages have contributed to the upside. Higher agricultural commodity prices augur well for crop nutrient demand in 2022.
Strong farmer profit margins driven by an upswing in crop commodity prices are also likely to boost fertilizer demand this year. Grower economics remain attractive in most global growing regions on strong crop demand. In the United States, healthy farm profits and high levels of planted acreage are expected to drive demand for fertilizers. Strong farmer economics are also expected to support demand in major markets such as Brazil and India.
A spike in grain and oilseed prices due to the disruptions to supply chains caused by Russia's invasion of Ukraine are likely to lend support to U.S. farm income this year. Healthy farm income aided by a rally in crop commodity prices will likely drive farmers’ spending on crop nutrients.
Global demand for potash is expected to be driven, in 2022, by strong grower economics and higher crop commodity prices amid limited supply availability. Demand for nitrogen fertilizer also remains strong. Higher economic activities are contributing to increased industrial consumption of nitrogen products. Global nitrogen requirement is expected to be driven by demand in North America, India and Brazil.
Fertilizer prices are also shooting higher amid war-led supply concerns. Russia is a major producer and global exporter of fertilizers. The Russian government’s move to restrict fertilizer exports has threatened supplies to world markets, pushing up prices of fertilizers. Exports from Russia have also been hit by the implementation of sanctions.
Potash prices have strengthened on the back of robust global demand and tight supply. Tight availability along with healthy demand is also driving phosphate prices globally. Higher demand and lower supply availability resulting from reduced operating rates across Europe and Asia due to higher energy prices has also fueled increases in nitrogen prices. A spike in natural gas prices in Europe has triggered nitrogen fertilizer production curtailments, driving global nitrogen prices. The pricing momentum is expected to continue on strength in crop markets and global supply constraints, exacerbated by the Russia-Ukraine conflict.
Solid Zacks Industry Rank
The Zacks Fertilizers industry currently carries a Zacks Industry Rank #6, which places it in the top 2% of more than 250 Zacks industries. The favorable rank reflects the industry’s strength. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Price Performance
The Zacks Fertilizers industry has outperformed the broader market in a year’s time. While the industry has rallied 68.9%, the S&P 500 has returned 13%.
Image Source: Zacks Investment Research
5 Stocks to Snap Up
The fertilizer industry is reaping the benefits of the underlying strength in the global agriculture markets. Factors like solid farm income and surging crop commodity prices support the bullish case for fertilizers. As such, it would be prudent to add some fertilizer stocks that offer compelling prospects.
We highlight the following five stocks with a solid Zacks Rank that are good options for investment right now. Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer good investment opportunities.
Nutrien: Canada-based Nutrien is benefiting from solid demand and higher prices for crop nutrients on strength in the global agriculture markets. NTR is also gaining from acquisitions, cost efficiency and increased adoption of its digital platform. The company also continues to expand its footprint in Brazil through acquisitions, including Tec Agro. These factors have contributed to its share price appreciation of around 82% over a year.
Nutrien, sporting a Zacks Rank #1, has an expected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for earnings for the current year for NTR has moved up 37.8% in the past 60 days.
Mosaic: Florida-based Mosaic is leveraging increasing global demand for fertilizers and higher realized prices in its businesses. MOS is also taking measures to cut costs. Its actions to improve the operating cost structure through transformation are contributing to profitability. Transformational savings are also driving margins in its Mosaic Fertilizantes segment. Driven by these factors, the company’s shares have shot up 120% over a year.
Mosaic, carrying a Zacks Rank #1, has an expected earnings growth rate of 125% for the current year. The Zacks Consensus Estimate for current-year earnings for MOS has moved up 29.2% in the past 60 days.
Sociedad Quimica: Chile-based Sociedad Quimica is benefiting from being the low-cost producer of potassium chloride, potassium sulfate and potassium nitrate. Higher demand is also supporting sales volumes in Sociedad Quimica’s specialty plant nutrition business. Rising demand is also backing the higher prices of potassium chloride. SQM is seeing a significant rise in global potassium prices driven by the shortage of potash and potassium-based fertilizers. These factors have contributed to its share price rally of around 63% in a year’s time.
Sociedad Quimica, sporting a Zacks Rank #1, has an expected earnings growth rate of 158.1% for the current year. The consensus estimate for earnings for the current year has been revised 34.3% upward over the last 60 days.
CF Industries: Illinois-based CF Industries is gaining from higher nitrogen fertilizer demand in the major markets. It is seeing higher nitrogen demand in North America for industrial uses. Higher nitrogen prices aided by strong global demand and lower global supply availability are also driving the company’s top line. CF remains committed to boosting shareholders’ value by leveraging strong cash flows. These factors have resulted in a share price rally of roughly 123% over a year.
CF Industries, carrying a Zacks Rank #2, has an expected earnings growth rate of 272.9% for the current year. The consensus estimate for current-year earnings for CF has been revised 22.1% upward over the past 60 days.
Intrepid Potash: Colorado-based Intrepid Potash is gaining from a strong commodity environment and higher fertilizer prices, which are supporting its sales and margins. A recovery in economic activities and the strength in commodity prices are driving demand for its specialty fertilizer, Trio. Higher realized sales prices for potash and Trio are driving IPI’s bottom line. Driven by these factors, the company’s shares have shot up around 166% over the past year.
Intrepid Potash, carrying a Zacks Rank #2, has an expected earnings growth rate of 331.3% for the current year. The Zacks Consensus Estimate for earnings for the current year for IPI has been revised 34.4% upward over the past 60 days.
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5 Top Fertilizer Stocks to Buy on Robust Industry Fundamentals
The fertilizer industry is enjoying a solid run, thanks to strong global demand and surging prices of crop nutrients. Strong agricultural market trends, a rally in crop commodity prices and attractive farm economics are driving demand for fertilizers globally. A tight global supply-demand balance has also boosted fertilizer prices and profit margins of fertilizer stocks. The momentum is expected to continue, backed by strong demand and pricing fundamentals for crop nutrients.
As such, stocks with compelling prospects like Nutrien Ltd. (NTR - Free Report) , The Mosaic Company (MOS - Free Report) , Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) , CF Industries Holdings, Inc. (CF - Free Report) and Intrepid Potash, Inc. (IPI - Free Report) are worth adding to your portfolio now.
Fertilizers Riding High on Demand & Pricing Strength
Rallying crop commodity prices and solid farmer economics are spurring demand for major fertilizers such as potash, phosphate and nitrogen. Prices of corn and soybean have surged to multi-year highs. Strong global demand coupled with supply constraints has boosted crop commodity prices. Higher freight, energy and labor costs and raw material shortages have contributed to the upside. Higher agricultural commodity prices augur well for crop nutrient demand in 2022.
Strong farmer profit margins driven by an upswing in crop commodity prices are also likely to boost fertilizer demand this year. Grower economics remain attractive in most global growing regions on strong crop demand. In the United States, healthy farm profits and high levels of planted acreage are expected to drive demand for fertilizers. Strong farmer economics are also expected to support demand in major markets such as Brazil and India.
A spike in grain and oilseed prices due to the disruptions to supply chains caused by Russia's invasion of Ukraine are likely to lend support to U.S. farm income this year. Healthy farm income aided by a rally in crop commodity prices will likely drive farmers’ spending on crop nutrients.
Global demand for potash is expected to be driven, in 2022, by strong grower economics and higher crop commodity prices amid limited supply availability. Demand for nitrogen fertilizer also remains strong. Higher economic activities are contributing to increased industrial consumption of nitrogen products. Global nitrogen requirement is expected to be driven by demand in North America, India and Brazil.
Fertilizer prices are also shooting higher amid war-led supply concerns. Russia is a major producer and global exporter of fertilizers. The Russian government’s move to restrict fertilizer exports has threatened supplies to world markets, pushing up prices of fertilizers. Exports from Russia have also been hit by the implementation of sanctions.
Potash prices have strengthened on the back of robust global demand and tight supply. Tight availability along with healthy demand is also driving phosphate prices globally. Higher demand and lower supply availability resulting from reduced operating rates across Europe and Asia due to higher energy prices has also fueled increases in nitrogen prices. A spike in natural gas prices in Europe has triggered nitrogen fertilizer production curtailments, driving global nitrogen prices. The pricing momentum is expected to continue on strength in crop markets and global supply constraints, exacerbated by the Russia-Ukraine conflict.
Solid Zacks Industry Rank
The Zacks Fertilizers industry currently carries a Zacks Industry Rank #6, which places it in the top 2% of more than 250 Zacks industries. The favorable rank reflects the industry’s strength. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Price Performance
The Zacks Fertilizers industry has outperformed the broader market in a year’s time. While the industry has rallied 68.9%, the S&P 500 has returned 13%.
Image Source: Zacks Investment Research
5 Stocks to Snap Up
The fertilizer industry is reaping the benefits of the underlying strength in the global agriculture markets. Factors like solid farm income and surging crop commodity prices support the bullish case for fertilizers. As such, it would be prudent to add some fertilizer stocks that offer compelling prospects.
We highlight the following five stocks with a solid Zacks Rank that are good options for investment right now. Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer good investment opportunities.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien: Canada-based Nutrien is benefiting from solid demand and higher prices for crop nutrients on strength in the global agriculture markets. NTR is also gaining from acquisitions, cost efficiency and increased adoption of its digital platform. The company also continues to expand its footprint in Brazil through acquisitions, including Tec Agro. These factors have contributed to its share price appreciation of around 82% over a year.
Nutrien, sporting a Zacks Rank #1, has an expected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for earnings for the current year for NTR has moved up 37.8% in the past 60 days.
Mosaic: Florida-based Mosaic is leveraging increasing global demand for fertilizers and higher realized prices in its businesses. MOS is also taking measures to cut costs. Its actions to improve the operating cost structure through transformation are contributing to profitability. Transformational savings are also driving margins in its Mosaic Fertilizantes segment. Driven by these factors, the company’s shares have shot up 120% over a year.
Mosaic, carrying a Zacks Rank #1, has an expected earnings growth rate of 125% for the current year. The Zacks Consensus Estimate for current-year earnings for MOS has moved up 29.2% in the past 60 days.
Sociedad Quimica: Chile-based Sociedad Quimica is benefiting from being the low-cost producer of potassium chloride, potassium sulfate and potassium nitrate. Higher demand is also supporting sales volumes in Sociedad Quimica’s specialty plant nutrition business. Rising demand is also backing the higher prices of potassium chloride. SQM is seeing a significant rise in global potassium prices driven by the shortage of potash and potassium-based fertilizers. These factors have contributed to its share price rally of around 63% in a year’s time.
Sociedad Quimica, sporting a Zacks Rank #1, has an expected earnings growth rate of 158.1% for the current year. The consensus estimate for earnings for the current year has been revised 34.3% upward over the last 60 days.
CF Industries: Illinois-based CF Industries is gaining from higher nitrogen fertilizer demand in the major markets. It is seeing higher nitrogen demand in North America for industrial uses. Higher nitrogen prices aided by strong global demand and lower global supply availability are also driving the company’s top line. CF remains committed to boosting shareholders’ value by leveraging strong cash flows. These factors have resulted in a share price rally of roughly 123% over a year.
CF Industries, carrying a Zacks Rank #2, has an expected earnings growth rate of 272.9% for the current year. The consensus estimate for current-year earnings for CF has been revised 22.1% upward over the past 60 days.
Intrepid Potash: Colorado-based Intrepid Potash is gaining from a strong commodity environment and higher fertilizer prices, which are supporting its sales and margins. A recovery in economic activities and the strength in commodity prices are driving demand for its specialty fertilizer, Trio. Higher realized sales prices for potash and Trio are driving IPI’s bottom line. Driven by these factors, the company’s shares have shot up around 166% over the past year.
Intrepid Potash, carrying a Zacks Rank #2, has an expected earnings growth rate of 331.3% for the current year. The Zacks Consensus Estimate for earnings for the current year for IPI has been revised 34.4% upward over the past 60 days.