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Mosaic Hits New 52-Week High: What's Driving the Stock?

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Shares of The Mosaic Company (MOS - Free Report) scaled a fresh 52-week high of $29.47 on Jun 7, before closing the day at $29.30.

The company has a market cap of roughly $11.3 billion. Average volume of shares traded in the last three months was around 4,336.4K. Mosaic has an expected long-term earnings per share growth rate of 7%.

The stock has rallied 22.9% in the past six months, outperforming the industry’s 11.5% rise.

Driving Factors

Buoyant earnings outlook, strong demand trends, higher fertilizer prices and upbeat prospects from the Vale Fertilizantes acquisition are contributing to the rally in Mosaic’s shares.

Mosaic is witnessing higher fertilizer prices, which helped the company to log a profit of $42 million or 11 cents per share in the first quarter against a loss of $1 million or break-even per share recorded a year ago. The company was able to offset the impact of lower sales volume in the Phosphates and Potash segments through higher average realized sales prices during the quarter.

The company also raised its adjusted earnings per share guidance for 2018 factoring in improved market conditions. For the year, Mosaic now expects adjusted earnings to be in the range of $1.20-$1.60 per share, up from its prior view of $1.00-$1.50.

Moreover, the company expects phosphates sales volumes in the band of 2.1 million to 2.4 million tons for the second quarter of 2018. The segment’s adjusted gross margin is expected to be in the band of $65 to $75 per ton. Potash sales volumes have been projected in the range of 2.1-2.4 million tons for the second quarter and the adjusted gross margin is anticipated to be in the band of $50 to $60 per ton.

Mosaic is strongly positioned to leverage the rising global demand for fertilizers. Demand remains strong as farmers are looking to replace nutrients from the soil in most of the major regions globally. The company sees improving market conditions and expects higher demand for both phosphate and potash to continue this year. It envisions 2018 to be another record year for global shipments of both products.

Moreover, the $2.5 million buyout of Vale Fertilizantes business makes Mosaic one of the leading fertilizer manufacturing and distribution companies in Brazil. The acquisition has allowed the company to capitalize on the rapidly growing Brazilian agricultural market. The acquisition is expected to be accretive to Mosaic's earnings per share in 2018 and the company is expected to realize around $100 million in synergies from the buyout this year.

Zacks Rank & Stocks to Consider

Mosaic currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering in the basic materials space are FMC Corporation (FMC - Free Report) , Westlake Chemical Corporation (WLK - Free Report) and Celanese Corporation (CE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC Corp has an expected long-term earnings growth rate of 14.3%. Its shares have moved up 15.8% in a year.

Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied 79.1% in a year.

Celanese has an expected long-term earnings growth rate of 8.9%. Its shares have gained 29.8% in a year.

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