In this article, we discuss 10 fertilizer stocks to buy today. If you want to see the top stocks in this group, click 5 Fertilizer Stocks to Buy Today.
The Russian invasion of Ukraine has resulted in global economic consequences, including the energy crisis, a shortage of agricultural commodities and inputs, broken global supply chains, and rampant inflation.
Fertilizer Market Outlook 2022
Amid Western sanctions and trade embargoes on Russia, which is one of the major global exporters of fertilizers, the prices for fertilizers have sharply risen over the last month. Since February 24, futures prices for urea fertilizers have increased 32%, while diammonium phosphate futures have soared 13%.
Western sanctions have also hit potash supplies from Belarus, a Russian ally, which is a key nutrient for crops of corn and soybeans, as well as fruits and vegetables. Similarly, a continued disruption in the global supply of nitrogen and potash could hinder crop yields in regions worldwide, which will result in food prices peaking even further in 2022 and 2023, even as they already sit above historical averages.
The war has significant ramifications for the U.S agriculture industry, since both Russia and Ukraine are important exporters of fertilizers and fertilizer inputs like natural gas, urea, and potash. Prices for fertilizers have climbed insanely since January owing to the war, but also due to unfeasible weather conditions, supply chain disruptions, and technical difficulties at plants. Additionally, 86% of the total potash in the United States is imported from Canada, and the Canadian Pacific Rail work stoppage will impact that supply as well.
In this uncertain macro environment, agribusinesses are set to thrive. Some of the top fertilizer stocks to buy today include The Andersons, Inc. (NASDAQ:ANDE), Nutrien Ltd. (NYSE:NTR), and The Mosaic Company (NYSE:MOS).
We carefully assessed the fertilizer market, selecting companies that have benefited from the Russia-Ukraine war and which display strong business fundamentals. Most of the chosen stocks have received positive analyst ratings over the past few weeks.
We have also mentioned the hedge fund sentiment around the stocks, which was gauged from Insider Monkey’s fourth quarter database of 924 hedge funds that filed 13Fs for the December 2021 reporting period.
Fertilizer Stocks to Buy Today
10. Origin Agritech Limited (NASDAQ:SEED)
Number of Hedge Fund Holders: 1
Origin Agritech Limited (NASDAQ:SEED) is based in Beijing, China, and operates as an agricultural biotechnology company engaged in breeding seeds and genetic improvement activities. The company also markets agricultural inputs such as fertilizers and agricultural chemicals.
On February 7, the stock jumped 13.3% in premarket trading after the company announced a profitable outlook for 2022, as well as projected revenue growth of 300% to RMB 150 million in FY22. The expected growth will come from its existing hybrid seed operations and its newer initiative of selling crops enhanced via GMO and CRISPR technologies to feedstock companies.
The database of Insider Monkey shows that Paul Marshall and Ian Wace’s Marshall Wace LLP purchased 6,890 shares of Origin Agritech Limited (NASDAQ:SEED) in the fourth quarter of 2021, worth $49,000, becoming the only SEED shareholder in our database in the process.
In addition to The Andersons, Inc. (NASDAQ:ANDE), Nutrien Ltd. (NYSE:NTR), and The Mosaic Company (NYSE:MOS), Origin Agritech Limited (NASDAQ:SEED) is a notable fertilizer name to invest in.
9. Bioceres Crop Solutions Corp. (NASDAQ:BIOX)
Number of Hedge Fund Holders: 2
Bioceres Crop Solutions Corp. (NASDAQ:BIOX) was founded in 2001 and is headquartered in Rosario, Argentina. The company offers crop productivity solutions such as seed technology, germplasm, and seed treatments. The Crop Protection segment of Bioceres Crop Solutions Corp. (NASDAQ:BIOX) develops herbicides, insecticides, fungicides, and micro-granulated fertilizers.
On March 16, Bioceres Crop Solutions Corp. (NASDAQ:BIOX) announced its plan to merge with Marrone Bio Innovations, Inc. (NASDAQ:MBII) in an all-stock transaction. The transaction is valued at roughly $236 million and is expected to close in the third quarter of calendar 2022. Upon completion of the transaction, Marrone Bio Innovations, Inc. (NASDAQ:MBII) shareholders will own approximately 16 million Bioceres Crop Solutions Corp. (NASDAQ:BIOX) shares, and at least two directors will be appointed to Bioceres Crop Solutions Corp. (NASDAQ:BIOX)’s board of directors by shareholders of Marrone Bio Innovations, Inc. (NASDAQ:MBII).
Lake Street analyst Ben Klieve maintained a 'Buy' rating and $25 price target on Bioceres Crop Solutions Corp. (NASDAQ:BIOX) shares on March 18. He called the company’s acquisition of Marrone Bio Innovations, Inc. (NASDAQ:MBII) a "visionary acquisition made at a great price".
According to Insider Monkey’s Q4 data, David Halpert’s Prince Street Capital Management is the leading shareholder of Bioceres Crop Solutions Corp. (NASDAQ:BIOX), with 127,000 shares worth $1.7 million.
8. Compass Minerals International, Inc. (NYSE:CMP)
Number of Hedge Fund Holders: 12
Compass Minerals International, Inc. (NYSE:CMP) is a Kansas-based provider of minerals such as salt, magnesium chloride, sulfate of potash, and related plant nutrition products. Compass Minerals International, Inc. (NYSE:CMP) is one of the leading suppliers of sulfate of potash specialty fertilizer in the Western Hemisphere. Amid a macro backdrop filled with global food shortages, Compass Minerals International, Inc. (NYSE:CMP) shares gained 11% in the last month.
On February 24, Compass Minerals International, Inc. (NYSE:CMP) declared a $0.15 per share quarterly dividend, which was paid on March 21 to shareholders of record on March 10.
CL King analyst David Silver raised his price target on Compass Minerals International, Inc. (NYSE:CMP) to $67 from $65 and assigned a 'Buy' rating to the shares on March 3. According to the analyst, the company’s valuation is increasingly sensitive to the future potential of its identified lithium resource and smaller growth plans. Compass Minerals International, Inc. (NYSE:CMP) is also implementing efficiency improvements at its Goderich salt mine, Silver told investors in a research note.
In the fourth quarter of 2021, 12 hedge funds held long positions in Compass Minerals International, Inc. (NYSE:CMP), compared to 14 funds in the prior quarter. Jeffrey Bronchick’s Cove Street Capital is the biggest shareholder of the company among that group, with 587,618 shares worth $30 million.
Here is what Bernzott Capital Advisors US Small Cap Value had to say about Compass Minerals International, Inc. (NYSE:CMP) in its Q4 2021 investor letter:
“Compass Minerals (CMP): The salt and plant nutrient producer reported earnings below expectations due to unfavorable weather conditions combined with higher operating costs. Additionally, the company announced a reduction in its quarterly dividend as they refocus capital on growing battery grade Lithium assets. Despite the disappointing results, we continue to view this stock as attractive based on its asset base, strong cash flow characteristics and the potential opportunity to unlock value with the Lithium assets.”
7. The Andersons, Inc. (NASDAQ:ANDE)
Number of Hedge Fund Holders: 15
The Andersons, Inc. (NASDAQ:ANDE) is based in Maumee, Ohio, and supplies plant nutrient products including fertilizers, as well as weed and pest control solutions. The agribusiness also provides a variety of grains. The Andersons, Inc. (NASDAQ:ANDE) stock has climbed 19.15% in the past month, in light of the Ukraine war causing a global shortage in the agriculture market.
On February 15, The Andersons, Inc. (NASDAQ:ANDE) published its fourth quarter earnings and revenue, both of which came in above the market consensus. The company attributed the strong Q4 results to a good harvest in 2021, as well as good operational and commercial decisions in its new growth markets that added to its profits.
Lake Street analyst Ben Klieve reiterated a 'Buy' rating on the stock and raised his price target on The Andersons, Inc. (NASDAQ:ANDE) to $50 from $45. He attributed the higher price target to the “record” Q4 results, which also led the analyst to raise his FY22 and FY23 estimates. In the current agriculture market, The Andersons, Inc. (NASDAQ:ANDE) has "far more sources of profit generation than the market appreciated in yesterday's response", the analyst told investors in a bullish thesis.
Arrowstreet Capital is the biggest shareholder of the company according to the Q4 database of Insider Monkey, with 362,928 shares worth $14 million. Overall, 15 hedge funds were bullish on the stock at the end of December 2021.
6. FMC Corporation (NYSE:FMC)
Number of Hedge Fund Holders: 27
Headquartered in Philadelphia, Pennsylvania, FMC Corporation (NYSE:FMC) is an agricultural sciences company that has a product portfolio focused on crop protection and plant health. It develops and markets insecticides, herbicides, and fungicides; as well as seed treatment solutions to boost crop yield.
FMC Corporation (NYSE:FMC) declared a $0.53 per share quarterly dividend on February 25, which equates to a forward yield of 1.8% at current share prices. The dividend is payable on April 21, for shareholders of record on March 31.
On March 22, Citi analyst P.J. Juvekar raised the firm's price target on FMC Corporation (NYSE:FMC) to $152 from $137, and maintained a 'Buy' rating on the stock. Despite recent underperformance, the company is positioned to benefit from its low valuation, recently cash-rich farmers who can afford to invest in enhanced crop yields, and rising demand for sustainable crop protection solutions. The stock has gained close to 13% in the last month.
In its Q4 earnings report, published on February 8, FMC Corporation (NYSE:FMC) posted EPS of $2.16, exceeding market estimates by $0.15. Its $1.41 billion in revenue represented a 22.69% jump compared to the prior-year quarter and topped consensus by $47.32 million.
According to Insider Monkey’s Q4 data, 27 hedge funds reported owning stakes in FMC Corporation (NYSE:FMC), valued at $452.2 million, compared to 28 funds the previous quarter with positions worth roughly $350 million. Amy Minella’s Cardinal Capital is the leading shareholder of the company as per our database, with 976,795 shares worth $107.3 million.
Elite hedge funds are pouring into FMC Corporation (NYSE:FMC), just like The Andersons, Inc. (NASDAQ:ANDE), Nutrien Ltd. (NYSE:NTR), and The Mosaic Company (NYSE:MOS).
Here is what Tweedy, Browne Company had to say about FMC Corporation (NYSE:FMC) in its Q3 2021 investor letter:
“FMC Corp. provides crop chemicals for the agriculture industry. Crop chemicals protect farmers’ fields from insects, fungus, and weeds, which allows them to increase their crop yields. As a result, farmers are more than willing to pay a price premium for effective products. Similar to pharmaceutical companies, crop protection products also are often “patented,” which gives them pricing power. In addition, the development time and investment, combined with navigating the regulatory process in a variety of jurisdictions, and then achieving distribution at scale, provide immense barriers to entry in the industry. Small companies may be able to conduct research on active ingredients, but it will be difficult for them to “commercialize” them. Given all of this, FMC has enjoyed a high return on capital and has been a very profitable business, earning a 27% EBITDA margin and a 25% ROE including goodwill for the year 2020.
FMC is diversified geographically and by crop, which should serve to make it a less cyclical business. It also has, in our view, a very good new product pipeline, and aims to grow its revenues at 5% to 7% annually through 2023, and its EBITDA at 7% to 9% annually through 2023. The company also has had some insider purchases recently from both its CEO and CFO…” (Click here to see the full text)
Click to continue reading and see 5 Fertilizer Stocks to Buy Today.
Disclosure: None. 10 Fertilizer Stocks to Buy Today is originally published on Insider Monkey.