The Mosaic Company’s (MOS - Free Report) stock looks promising at the moment. The company has seen its shares rise roughly 20% over the past three months.
If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s delve deeper into the factors that make this fertilizer company an attractive investment option.
What Makes MOS an Attractive Pick
Solid Rank & VGM Score: Mosaic currently sports a Zacks Rank #1 (Strong Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities for investors. Thus, the company is a compelling investment proposition at the moment.
An Outperformer: Mosaic has outperformed the industry it belongs to in the past six months. The company’s shares have gained 27.3% compared with roughly 1% rise recorded by the industry.
Estimates Moving North: The Zacks Consensus Estimate for earnings for Mosaic improved in the past month. Over this period, earnings estimates for the fourth quarter have moved up 10% to 55 cents per share while the same for 2018 rose 7.5% to $1.87.
Upbeat Outlook: Mosaic raised adjusted earnings per share (EPS) guidance for 2018 factoring in strong business performance and lower expected effective tax rate for the year. The company expects adjusted EPS in the range of $1.80-$2.00, up from the prior view of $1.45-$1.80. The company also expects adjusted EBITDA for 2018 in the band of $1.90-$2 billion, up from the previous view of $1.80-$1.95 billion.
Bright Prospects From the Vale Fertilizantes Buyout: The Vale Fertilizantes acquisition makes Mosaic one of the leading fertilizer manufacturing and distribution companies in Brazil. The buyout has enabled the company to capitalize on the rapidly growing Brazilian agricultural market.
The acquisition is projected to generate $275 million of annualized improved cash flow by the end of 2020 (with $140-$160 million in synergies expected in 2018) along with providing considerable leverage to improvements in the crop nutrient business cycle to the company.
Favorable Fertilizer Market Fundamentals: Mosaic is well positioned to leverage the favorable global demand environment for fertilizers. The company expects phosphates sales volumes in the band of 1.7-2 million tons for the fourth quarter of 2018, reflecting underlying firmness in demand and supply dynamics as well as normal year-end seasonality. It forecasts rising global demand for phosphates and expects record shipments in 2019.
The company also expects market conditions to stay strong in potash along with high operating rates in the three Canadian mines. It sees potash volumes in the range of 2.2-2.5 million tons for the fourth quarter.
The company is also gaining from higher fertilizer prices, which boosted its top line in the third quarter of 2018. Higher average realized sales prices enabled the company achieve double-digit sales growth in the Phosphates and Potash segments.
Other Stocks to Consider
A few other top-ranked stocks in the basic materials space include CF Industries Holdings, Inc (CF - Free Report) , Methanex Corporation (MEOH - Free Report) and Ashland Global Holdings Inc. (ASH - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have rallied 23% in the past year.
Methanex has an expected long-term earnings growth rate of 15%. Its shares have gained 8.6% in a year’s time.
Ashland has an expected long-term earnings growth rate of 10%. The company’s shares have gained 14.8% in the past year.
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