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The Mosaic Company (MOS - Free Report) is a Zacks Rank #1 (Strong Buy) that is a leading producer and marketer of phosphate and potash. The company supplies the global agriculture industry, which has been thriving due to recent high prices in grains.
Because of the increasing demand for Mosaic products, the company is seeing a big surge in its business. For that reason, the stock is hitting highs not seen since 2018. Despite the big run in the stock, as long as grain prices remaining elevated, investors should expect the MOS to grind higher into the end of the year.
About the Company
Mosaic is headquartered in Tampa, FL and has over 12,000 employees. The company accounts for roughly 13% of global annual phosphate production and around 11% of global annual potash production.
Mosaic sells its products to wholesale distributors, retail chains, farmers, cooperatives, independent retailers, and national accounts.
MOS is valued at about $13 billion and has a Forward PE of 14. The company holds a Zacks Style Score of “B” in Value, “C” in Growth, and “C” in Momentum.
Q4 Earnings and Update
Back in February Mosaic reported a big earnings beat, seeing a surprise to the upside of 137%. Q4 came in at $0.57 v the $0.24 expected, and revenues came in at $2.46B v the $2.30B expected.
The company had a big increase in potash sales volumes (millions of tonnes), seeing 2.7M v the 1.5M last year. Additionally, the company saw improvement in its cost structure by shifting potash production, which delivered $300M in transformation savings in 2020.
The quarter impressed analysts, who started lifting estimates and price targets. Since earnings, the company had an investor day that updated their targeted 2025 capex to $800M and guided their 2021 EBITDA to $440M, 2022 EBITDA to $600M and 2023 EBITDA to $700M. With that, the company also lifted the dividend 50%, which brought the dividend yield up to about 0.90%.
The stock has reacted well to EPS and the investor day, up over 10% since earnings release.
Estimates and Upgrades
Looking at estimates we see a big jump across the board over the last month. For the next quarter, estimates have gone 145% higher, from $0.31 to $0.76. For the current year, we see a 54% jump in estimates, going from $1.53 to $2.36 over that same timeframe.
The magnitude of these raises has price targets coming up. But for all of this to be maintained, the agriculture industry has to be strong, which means the higher grain prices the better.
Grain Prices
The global demand for agriculture products remains strong and we continue to expect this to be the trend as economies reopen after the pandemic. Additionally, multiple factors on the supply side have elevated grain prices to levels not seen since 2013.
Higher ag commodity prices push the demand for crop nutrient products higher. So as long as we have this tight supply/strong demand dynamic keeping grains elevated, we will see demand for potash and fertilizer remain strong.
The Technical Take
The stock is at 52-week highs and pressing the 2018 highs made at the $37 level. This will be a big spot for the bulls to take control and push for a larger run higher.
The stock is on a 45-degree angle march to the upside, with support at moving averages significantly below current levels. The 21-day MA is at $31.50, the 50-day is at $29.50 and for those of you praying for a massive pull back, the 200-day is at $20.50.
As far as Fibonacci levels, if we draw the 2018 highs to 2020 lows, we get a 161.8% target at $56. This is a big macro target, so while it might take a while to get there, but for longer-term investors that move over $50 is in the cards.
In Summary
The commodity space is hot. Most investors shy away from commodities as they don’t know how to get exposure outside a futures account. Mosaic is a great way to ride the commodity bull market as the price of the stock is very closely correlated with the grain markets.
Look for this bullish price momentum to continue into the end of the year and the stock to possibly break to the $50 level.
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Bull of the Day: The Mosaic Company (MOS)
The Mosaic Company (MOS - Free Report) is a Zacks Rank #1 (Strong Buy) that is a leading producer and marketer of phosphate and potash. The company supplies the global agriculture industry, which has been thriving due to recent high prices in grains.
Because of the increasing demand for Mosaic products, the company is seeing a big surge in its business. For that reason, the stock is hitting highs not seen since 2018. Despite the big run in the stock, as long as grain prices remaining elevated, investors should expect the MOS to grind higher into the end of the year.
About the Company
Mosaic is headquartered in Tampa, FL and has over 12,000 employees. The company accounts for roughly 13% of global annual phosphate production and around 11% of global annual potash production.
Mosaic sells its products to wholesale distributors, retail chains, farmers, cooperatives, independent retailers, and national accounts.
MOS is valued at about $13 billion and has a Forward PE of 14. The company holds a Zacks Style Score of “B” in Value, “C” in Growth, and “C” in Momentum.
Q4 Earnings and Update
Back in February Mosaic reported a big earnings beat, seeing a surprise to the upside of 137%. Q4 came in at $0.57 v the $0.24 expected, and revenues came in at $2.46B v the $2.30B expected.
The company had a big increase in potash sales volumes (millions of tonnes), seeing 2.7M v the 1.5M last year. Additionally, the company saw improvement in its cost structure by shifting potash production, which delivered $300M in transformation savings in 2020.
The quarter impressed analysts, who started lifting estimates and price targets. Since earnings, the company had an investor day that updated their targeted 2025 capex to $800M and guided their 2021 EBITDA to $440M, 2022 EBITDA to $600M and 2023 EBITDA to $700M. With that, the company also lifted the dividend 50%, which brought the dividend yield up to about 0.90%.
The stock has reacted well to EPS and the investor day, up over 10% since earnings release.
Estimates and Upgrades
Looking at estimates we see a big jump across the board over the last month. For the next quarter, estimates have gone 145% higher, from $0.31 to $0.76. For the current year, we see a 54% jump in estimates, going from $1.53 to $2.36 over that same timeframe.
The magnitude of these raises has price targets coming up. But for all of this to be maintained, the agriculture industry has to be strong, which means the higher grain prices the better.
Grain Prices
The global demand for agriculture products remains strong and we continue to expect this to be the trend as economies reopen after the pandemic. Additionally, multiple factors on the supply side have elevated grain prices to levels not seen since 2013.
Higher ag commodity prices push the demand for crop nutrient products higher. So as long as we have this tight supply/strong demand dynamic keeping grains elevated, we will see demand for potash and fertilizer remain strong.
The Technical Take
The stock is at 52-week highs and pressing the 2018 highs made at the $37 level. This will be a big spot for the bulls to take control and push for a larger run higher.
The stock is on a 45-degree angle march to the upside, with support at moving averages significantly below current levels. The 21-day MA is at $31.50, the 50-day is at $29.50 and for those of you praying for a massive pull back, the 200-day is at $20.50.
As far as Fibonacci levels, if we draw the 2018 highs to 2020 lows, we get a 161.8% target at $56. This is a big macro target, so while it might take a while to get there, but for longer-term investors that move over $50 is in the cards.
In Summary
The commodity space is hot. Most investors shy away from commodities as they don’t know how to get exposure outside a futures account. Mosaic is a great way to ride the commodity bull market as the price of the stock is very closely correlated with the grain markets.
Look for this bullish price momentum to continue into the end of the year and the stock to possibly break to the $50 level.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
AccessZacks Top 10 Stocks for 2021 today >>