The supply chain disruptions caused by the Russia-Ukraine war have resulted in a surge in fertilizer prices. Russia is the world’s largest producer of fertilizers. Many countries are trying to cut their reliance on Russia for their fertilizer needs by focusing on domestic production.

Despite the challenges, the fertilizer industry witnesses consistent demand because of their importance in boosting agricultural production. The global fertilizer market is expected to grow substantially as the population increase pushes food consumption. The global fertilizer market is projected to grow at a CAGR of 3.3% to reach $205.34 billion by 2028.

Given this backdrop, it could be wise to buy fundamentally strong fertilizer stocks Nutrien Ltd. (NTR), CF Industries Holdings, Inc. (CF), and The Mosaic Company (MOS).

Nutrien Ltd. (NTR)

Headquartered in Saskatoon, Canada, NTR provides crop inputs and services. It offers potash, nitrogen, phosphate, and sulfate products, and financial solutions. The company also distributes crop nutrients, crop protection products, seeds, and merchandise products in the United States, Canada, South America, and Australia.

Over the last three years, NTR’s dividend payouts have grown at a 3% CAGR. Its four-year average dividend yield is 3.31%, and its forward annual dividend of $1.92 per share translates to a 2.62% yield. It is expected to pay a quarterly dividend of $0.48 per share on January 13, 2023.

On July 20, 2022, NTR agreed to acquire Brazilian company Casa do Adubo S.A. NTR’s President and CEO, Ken Seitz, said, "The acquisition expands our footprint in Brazil from five states to 13 and supports growers in a key region of the world that will increasingly be relied on to sustainably increase crop production and feed a growing population." Upon completion of the acquisition, NTR expects to surpass its estimated target of $100 million adjusted EBITDA in Brazil by 2023.

NTR’s sales for the third quarter ended September 30, 2022, increased 35.9% year-over-year to $8.19 billion. Its net earnings increased 118% year-over-year to $1.58 billion. Additionally, its adjusted EBITDA increased 50.2% year-over-year to $2.47 billion, while its adjusted net EPS came in at $2.51, representing an 81.9% increase from the prior-year quarter. 

Analysts expect NTR’s EPS and revenue for the quarter ending December 31, 2022, to increase 12.3% and 8.1% year-over-year to $2.77 and $7.64 billion, respectively. The stock has gained 5.3% over the past year to close the last trading session at $73.33. 

NTRs strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.  

Within the Agriculture industry, it is ranked #6 out of 28 stocks. It has a B grade for Growth, Value, and Quality.

We have also given NTR grades for Momentum, Stability, and Sentiment. Get all NTR ratings here. 

CF Industries Holdings, Inc. (CF)

CF manufactures and sells hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities worldwide. Its principal products include anhydrous ammonia, granular urea, urea ammonium nitrate, and ammonium nitrate products. 

Over the last three years, CF’s dividend payouts have grown at a 7.7% CAGR. Its four-year average dividend yield is 2.58%, and its forward annual dividend of $1.60 per share translates to a 1.71% yield. It paid a quarterly dividend of $0.40 per share on November 30, 2022.   

On October 12, 2022, it was announced that CF had entered into a commercial agreement with Exxon Mobil Corporation (XOM) to capture and permanently store up to two million metric tons of CO2 emissions annually from its manufacturing complex in Louisiana. This should support CF’s decarbonization goals.

CF’s net sales for the third quarter ended September 30, 2022, increased 70.4% year-over-year to $2.32 billion. The company’s net earnings attributable to common stockholders increased 336.8% year-over-year to $438 million. Additionally, its EPS attributable to common stockholders increased 353.5% year-over-year to $2.18. Also, its adjusted EBITDA increased 101.4% year-over-year to $983 million.

CF’s EPS and revenue for the quarter ending December 31, 2022, are expected to increase 23.5% and 14.3% year-over-year to $4.36 and $2.90 billion, respectively. The stock has gained 32.2% year-to-date to close the last trading session at $93.55.

It is no surprise that CF has an overall rating of B, translating to a Buy in our proprietary rating system. Within the same industry, it is ranked #9. In addition, it has an A grade for Quality and a B for Value. 

Click here to see the additional ratings of CF for Growth, Momentum, Stability, and Sentiment.

The Mosaic Company (MOS)  

MOS produces and markets concentrated phosphate and potash crop nutrients in North America and internationally. The company operates through three segments: Phosphates, Potash, and Mosaic Fertilizantes. 

Over the last three years, MOS’ dividend payouts have grown at a 47.6% CAGR. Its four-year average dividend yield is 0.82%, and its forward annual dividend of $0.80 per share translates to a 1.76% yield. It is expected to pay a quarterly dividend of $0.20 per share on March 16, 2022.   

MOS’ net sales increased 56.5% year-over-year to $5.34 billion for the third quarter ended September 30, 2022. Its gross margin increased 73.7% year-over-year to $1.50 billion. The company’s net earnings attributable to MOS increased 126.3% year-over-year to $841.70 million.

Additionally, its adjusted EPS attributable to MOS increased 138.5% year-over-year to $3.22. Also, its adjusted EBITDA increased 74% year-over-year to $1.68 billion. 

MOS’ EPS and revenue for the quarter ending December 31, 2022, are expected to increase 29.5% and 16.5% year-over-year to $2.53 and $4.47 billion. The stock has gained 15.4% year-to-date to close the last trading session at $45.34. 

MOS’ solid prospects are reflected in its POWR Ratings. The company has an overall rating of B, which equates to a Buy in our proprietary rating system. It is ranked #8 in the Agriculture industry. In addition, it has an A grade for Value and a B for Growth and Quality. 

In total, we rate MOS on eight different levels. Beyond what we stated above, we have also given MOS grades for Momentum, Stability, and Sentiment. Get all MOS ratings here.

NTR shares were trading at $74.77 per share on Wednesday afternoon, up $1.44 (+1.96%). Year-to-date, NTR has gained 1.62%, versus a -17.35% rise in the benchmark S&P 500 index during the same period.

Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.

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