Nutrien Is Up By 3%, Here Is Why

Key Insights

  • Nutrien’s first-quarter earnings missed analyst estimates, but the stock moved higher. 
  • Traders focused on the company’s guidance for 2022, which reflects favorable market conditions. 
  • While the company’s shares enjoyed a strong start of this year, the stock is trading at just 9 forward P/E. 

Nutrien Gains Ground After Raising Full-Year 2022 Guidance

Shares of the fertilizer producer Nutrien gained upside momentum after the company released its first-quarter results. Nutrien reported revenue of $7.66 billion and adjusted earnings of $2.70 per share, beating analyst estimates on revenue and missing them on earnings.

The market focused on Nutrien’s new outlook for the full-year 2022. Adjusted EBITDA guidance was raised to $14.5 billion – $16.5 billion, while adjusted EPS guidance was increased to $16.20 – $18.70. The company noted that it would allocate a minimum of $2 billion to share repurchases in 2022.

Speaking about the outlook for the year, Nutrien commented: “We expect to generate higher earnings and cash flows in 2022, which provides an opportunity to accelerate our strategic initiatives that we believe will advance sustainable practices and create long-term value for all our stakeholders.”

Other fertilizer stocks like Mosaic and CF Industries have also enjoyed support today as traders bet that market conditions will remain favorable in 2022.

What’s Next For Nutrien Stock?

Currently, analysts expect that Nutrien will report earnings of $14.79 per share in 2022 and $11.43 per share in 2023, so the stock is trading at 9 forward P/E.

Analyst estimates have been moving higher in recent months, which was bullish for the stock. This trend will be continued as the company expects to report earnings of $16.20 – $18.70 per share this year, which is higher than the current analyst consensus.

The situation in the agricultural markets remains challenging. While some products, like wheat, have pulled back from their recent highs, corn and rice futures are trading at yearly highs. In this market environment, fertilizer pricing will likely remain robust, providing more support to Nutrien stock.

For a look at all of today’s economic events, check out our economic calendar.

Best Fertilizer Stocks To Buy Now

Key Insights

  • Fertilizer stocks rally due to strong agricultural markets and supply disruptions. 
  • Stocks remain cheap as traders and analysts do not believe that current financial performance is sustainable. 
  • There is a potential for multiple expansion in case analysts start to change their estimates for 2023 and beyond. 

While S&P 500 is down by about 7% year-to-date, fertilizer stocks have rallied this year amid shortages and food inflation. As negotiations between Russia and Ukraine have stalled and agricultural markets prepare for a long conflict, fertilizer stocks remain in demand.

Nutrien

Nutrien , which produces potash, nitrogen and phosphate products, is already up by about 45% year-to-date. Analysts expect that Nutrien will report earnings of $13.68 per share this year, so the stock is trading at roughly 8 forward P/E, which is cheap for the current market environment.

The key question for Nutrien (and other fertilizer stocks) is whether the current performance will be sustainable. However, the current upside momentum in the agricultural markets is strong, so Nutrien should have a chance to move higher this year due to its current cheap valuation.

Mosaic

Mosaic has already enjoyed a very strong rally in 2022. However, the stock is still cheap at less than 7 forward P/E for 2022.

At this point, the market does not believe that Mosaic will be able to show similar results in 2023 and beyond. However, the current crisis may be structural, and fertilizer prices may stay elevated for years to come, which will be bullish for Mosaic.

CF Industries

The big picture is similar for CF Industries. The stock has received strong support at the start of this year, but it is still trading at 7 forward P/E as the market does not believe that current performance will be sustainable.

However, the current disruptions may prove to be more significant than previously expected, and analysts will be forced to update their estimates for 2023, which would be bullish for CF Industries and other fertilizer stocks.

For a look at all of today’s economic events, check out our economic calendar.

CF Industries Attracts Big Money

And the nitrogen fertilizer manufacturer could keep climbing due to strong demand amid geopolitical tensions. But another likely reason is Big Money lifting the stock.

So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And CF Industries has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the Big Money signals CF has made the last year.

The last few weeks have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

Source: www.mapsignals.com

In the last year, the stock attracted 27 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out technical action grabbing my attention:

Outperformance is important for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, CF Industries has been growing sales and earnings at double-digit rates. Take a look:

  • 1-year sales growth rate (+58.5%)
  • 3-year EPS growth rate (+78.2%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, CF has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

CF has a lot of qualities that are attracting Big Money. It’s made this list 21 times since 2009, with its first appearance on 03/02/2009…and gaining 1,039.6% since. The blue bars below show the times that CF Industries was a top pick:

Source: www.mapsignals.com

It’s been a top stock in the materials sector according to the MAPsignals process. I wouldn’t be surprised if CF makes additional appearances in the years to come. Let’s tie this all together.

The Bottom Line

The CF Industries rally could have further to go. Big Money buying in the shares is signaling to take notice. Shares could be positioned for further upside, plus CF pays a current 1.18% dividend. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a diversified portfolio.

Disclosure: the author holds no positions in CF at the time of publication.

Learn more about the MAPsignals process here.

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