Best Fertilizer Stocks To Buy In June

Key Insights

  • Fertilizer stocks lacked momentum in the previous month as traders took profits after the major rally. 
  • Meanwhile, analysts continued to adjust their estimates, highlighting the sustainability of high fertilizer prices. 
  • Mosaic and Nutrien are trading at just 6-7 forward P/E, and the potential multiple expansion could push these stocks to recent highs. 

Fertilizer stocks have been mostly range-bound in May as traders continued to take profits off the table after the major rally. Meanwhile, analyst estimates were moving higher, which could provide additional support to the stocks in this market segment.

Nutrien

Analysts estimates for Nutrien keep moving higher, and the company is expected to report earnings of $13.95 per share in the next year. The stock is trading at just 7 forward P/E, which is cheap.

It looks that the market is worried that high fertilizer prices will not be sustainable in the longer-term. However, there is enough room for multiple expansion, so Nutrien stock may have more upside even if earnings estimates remain intact.

Mosaic

Mosaic stock was also stuck in a range in May while analyst estimates continued to improve. Currently, the company is expected to report earnings of $14.22 per share in the current year and $10.81 per share in the next year, so the stock is trading at just 6 forward P/E.

As in Nutrien’s case, the market looks worried about the sustainability of high fertilizer prices. At the same time, analysts have already realized that the recent upside moves in fertilizer markets are not temporary, so they continue to adjust their estimates.

Multiple expansion could be the key driver for Mosaic shares in the upcoming months as the current valuation looks too modest. The main risk is the potential market sell-off due to Fed’s quantitative tightening, which could put pressure on most stocks.

To keep up with the latest earnings updates, visit our earnings calendar.

Best Stocks to Battle Inflation Fears for May 2022

As such, we’ve seen big selling over the past six months by Big Money investors like institutions and pension funds. Inflation and equity downturns can be a nasty combo punch for investors, and we’re seeing it now.

Markets and Big Money in the Last Six Months

My research firm, MAPsignals, tracks the Big Money because we believe that’s what tends to move markets. Right now, there’s huge selling (red bars) and an almost complete lack of buying (blue bars):

But there have been some sectors doing well despite the mass market downfall. Three are energy, materials, and utilities. They’re rising because of inflation and the current geopolitical situation’s effect on supply chains.

Chart, histogram Description automatically generated

But that doesn’t mean the only winners are there, just that those sectors are generally benefiting from current market conditions. See, when it comes to inflation, investors need stocks that can handle storms. Those tend to be strong, big companies with healthy balance sheets as well as pricing power that enables paying dividends. Here are five stocks that can go a long way to help battle inflation: ADM, MOS, CTVA, EOG, and JNJ.

Archer-Daniels-Midland Company (ADM) Analysis

Up first is Archer-Daniels-Midland, the agricultural commodities giant.

Companies with pricing power can do well in inflationary environments. With ADM focused on food staples and suffering from supply chain issues, it is experiencing elevated prices and strong demand at the same time. It’s weathered the storm well and pays a nearly 1.9% current dividend. Stocks like ADM are worthy of attention, especially on pullbacks. Check out Archer-Daniels-Midland:

  • 1-month performance (-10.8%)
  • Year-to-date performance (+25.0%)
  • Recent Big Money buy signals

To show you what our Big Money signals look like on a stock, have a look at all the buys in ADM over the past year:

Looking more broadly, Archer-Daniels-Midland has been a high-quality stock for years. The blue bars in the chart below show when ADM was a high-ranking stock likely being bought by a Big Money player, according to MAPsignals. When you see a lot of blue, like ADM has recently, it can be very bullish:

Source: www.MAPsignals.com

Those blue signals indicate Big Money buying and solid fundamentals. As you can see, Archer-Daniels-Midland’s sales and earnings growth have been strong, making it worthy of attention:

  • 1-year sales growth rate (+32.4%)
  • 3-year EPS growth rate (+19.1%)

The Mosaic Company (MOS) Analysis

Next up is Mosaic, a fertilizer and feed company that pays a nearly 0.8% current dividend.

Check out these technicals for MOS:

  • Year-to-date performance (+51.0%)
  • 1-month performance (-19.6%)
  • Recent Big Money buy signals

As markets have turned from growth to value and geopolitical tensions have risen, stocks in certain sectors, like materials, have benefitted. MOS is definitely one of those, as you can see the Big Money buying that’s been prevalent the last year:

Now let’s look long-term. Below are the top buy signals for Mosaic since 2009. The Big Money has been on it in waves:

Source: www.MAPsignals.com

Now let’s look under the hood. As you can see, Mosaic has had strong recent sales growth and owns a healthy profit margin:

  • 1-year sales growth (+42.3%)
  • Profit margin (+13.2%)

Corteva Inc. (CTVA) Analysis

Another inflation-beating name is Corteva, an agricultural firm focused on solving the world’s biggest food challenges. It currently pays a 1.0% dividend.

Strong inflation-beating stocks almost always have Big Money buying support. Corteva has had that in the past year, and its recent dip may provide an attractive buy opportunity.

  • Year-to-date performance (+13.0%)
  • 1-month performance (-10.3%)
  • Historical Big Money signals

Below are the blue Top 20 Big Money buy signals CTVA has made in the last year. Look at how Big Money drives up prices. That’s the JUICE!

Source: www.MAPsignals.com

Let’s look deeper. Earnings growth for Corteva has been impressive. I expect more of the same in the coming years. Its minimal debt is also encouraging for the future.

  • 3-year EPS growth rate (+121.9%)
  • Debt/equity ratio (+6.2%)

EOG Resources, Inc. (EOG) Analysis

Number four on the list is EOG Resources, which is a low-cost oil and natural gas company. It currently pays a dividend of slightly more than 2.5%.

Here are the technicals important to me:

  • 1-month performance (-2.6%)
  • Year-to-date performance (+36.5%)
  • Historical Big Money signals

With the energy sector on a rise for a while, EOG has seen a lot of Big Money buying:

Given that, it’s not surprising EOG Resources is a Big Money favorite recently. But it’s been like that for some time. Below are the Big Money Top 20 buy signals for EOG since 2004:

Source: www.MAPsignals.com

Let’s look under the hood. EOG Resources sales have jumped quite a bit and its profit margin keeps investors happy:

  • 1-year sales growth rate (+99.1%)
  • Profit margin (+23.6%)

Johnson & Johnson (JNJ) Analysis

Our last inflation beater is Johnson & Johnson, the health care giant. It’s involved in many aspects of health care and pays a nearly 2.6% dividend currently. JNJ has been strong since markets got rocky last fall:

Check out these technicals:

  • 1-month performance (-2.1%)
  • Year-to-date performance (+3.0%)
  • Historical Big Money signals

JNJ is a high-quality stock. It’s made the MAPsignals Top 20 buy report 113 times since 1990. As you can see below, it’s been a Big Money favorite:

Source: www.MAPsignals.com

Now let’s look below the surface a bit. JNJ sales have been growing, it’s highly profitable, and the stock is not too expensive right now:

  • 1-year sales growth rate (+13.5%)
  • Profit margin (+22.3%)
  • Forward price-to-earnings ratio (+17.2x)

Bottom Line

ADM, MOS, CTVA, EOG, and JNJ represent the best stocks to battle inflation for May 2022. This group has been able to handle volatile markets well. They’re strong, fundamentally-sound stocks that pay dividends and are set up for success in inflationary environments.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in EOG in personal and managed accounts.

Contact

https://mapsignals.com/contact/

Best Fertilizer Stocks To Buy In May

Key Insights

  • Demand for fertilizer stocks remains strong after the recent pullback. 
  • Earnings estimates continue to move higher as analysts realize that high fertilizer prices would be sustainable. 
  • The market has not priced in the potential upside from high prices, and leading fertilizer stocks are trading at attractive valuation levels. 

While S&P 500 continues to trade near yearly lows, the upside trend in fertilizer stocks remains strong. This not surprising given the bullish sentiment in agricultural markets.

Nutrien

Nutrien has recently released its first-quarter earning report, missing analyst estimates on earnings. Nevertheless, earnings estimates continued to move higher.

Currently, analysts expect that Nutrien will report earnings of $15.89 per share in 2022 and $12.46 per share in 2023, so the stock is trading at roughly 8 forward P/E, which is cheap for the current market environment.

The bullish outlook for fertilizer markets and the increasing attractiveness of low-PE assets amid rising yields could provide more support to Nutrien stock and push it back to the yearly highs near the $117 level.

Mosaic

The recent quarterly report from Mosaic has also missed analyst estimates. The company reported revenue of $3.92 billion and adjusted earnings of $2.41 per share.

As in Nutrien’s case, earnings estimates continued to move higher. Mosaic is expected to report earnings of $13.61 per share in 2022 and $10.31 per share in 2023, so the stock is trading at just 6 forward P/E, which is extremely cheap.

It looks that the market is worried that fertilizer prices will pull back in the second half of the year, so traders are not ready to assign better valuation to Mosaic. However, the current valuation levels look too cheap, and there is enough room for multiple expansion, which could push the stock closer to its recent highs near the $80 level.

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

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.