- The consumer price index (CPI) rose 7.9% in February, the highest in four decades, driven by high energy, food, and services costs.
- Russia is one of the world’s top fertilizer producers, but sanctions could disrupt supplies.
- Higher fertilizers cost could hit crop yield.
The consumer price index (CPI) rose 7.9% in February, the highest in four decades. The prices may go up further in March if the Russia-Ukraine war does not stop.
Russia is among the top producers of fertilizers globally. It exports a significant portion of its production. But the Russian sanctions could increase fertilizer cost and hit crop production.
On Wednesday, Ukraine banned the export of barley, sugar, and meat until the end of this year as the war took its toll on agricultural and meat production.
Here we discuss five fertilizers stocks that may be worth exploring this year.
CF Industries Holdings, Inc. (NYSE: CF)
Market Cap: US$20.16 billion
Closing price on March 10, 2022: US$97.25
CF Industries produces and distributes nitrogen fertilizers. Its production facilities are in the US. It also has joint ventures with the UK, Trinidad, and Tobago.
It makes nitrogen using low-cost natural gas. It is regarded as one of the world’s lowest-cost nitrogen producers. It also invests in carbon-free blue and green ammonia used as an alternative fuel to hydrogen.
For the fiscal year 2021, the Illinois-based company earned a net income of US$917 million or US$4.24 per diluted share. The EBITDA was US$2.17 billion. It reported net sales of US$6.5 billion compared to US$4.1 billion in fiscal 2020.
In FY 2020, the net income was US$317 million or US$1.47 per diluted share, and EBITDA was US$1.32 billion.
The stock has a dividend yield of 1.3% and an annualized dividend of US$1.20. It traded in the range of US$100.52 to US$43.19 in one year.
Mosaic Company (NYSE: MOS)
Market Cap: US$22.91 billion
Closing price on March 10, 2022: US$62.19
Tampa, Florida-based Mosaic Company produces phosphate and potash - primary crop nutrients. It has rock mines in Florida, Louisiana, New Mexico, Brazil, Peru, and Saskatchewan.
Mosaic reported net sales of US$12.36 billion for the fiscal year ended December 31, 2021, compared to US$8.68 billion for the previous fiscal year. Its net earnings came in at US41.63 billion or US$4.27 per diluted share versus US$0.666 billion or US$1.75 per diluted share in fiscal 2020.
On February 24, the company announced an accelerated share repurchase or ASR agreement with Goldman Sachs to buy back US$400 million of its common stocks.
The stock has a dividend yield of 0.78% and an annualized dividend of US$0.45. It traded in the range of US$64.71 to US$28.26 in one year.
Intrepid Potash, Inc (NYSE: IPI)
Market Cap: US$1.1 billion
Closing price on March 10, 2022: US$81.15
Intrepid produces and sells potash and its byproducts. The company has three operating segments: Potash, Trio, and Oilfield solutions. The company has production facilities in the US, and most of its revenue also comes from the US. It is based in Denver, Colorado.
In February 2022, its board of directors approved a US$35 million share repurchase program after the fourth-quarter and full-year earnings results.
It reported sales of US$270 million in fiscal 2021 compared to US$197 million in the previous fiscal year. The net income of the company was US$249.8 million or US$19.07 per diluted share compared to the net loss of US$27.15 million or US$2.09 per diluted share in fiscal 2020.
The stock has a P/E ratio of 4.36 and the forward P/E for one year of 14.49. Its stock traded in the price range of US$84.39 to US$22.82 in the last 52 weeks.
Corteva, Inc. (NYSE: CTVA)
Market Cap: US$38.96 billion
Closing price on March 10, 2022: US$53.59
Corteva develops seed and crop chemicals. The Wilmington, Delaware-based company operates globally, but around half of its revenue comes from North America.
Its net sales grew 10% YoY to US$15.66 billion in the fiscal year 2021 compared to US$14.2 billion in the previous fiscal year. The net income came in at US$1.76 billion or US$2.37 per diluted share compared to US$0.681 billion or US$0.91 per diluted share for fiscal 2020.
For full-year 2022, the company expects the net sales to be in the range of US$16.7 billion to US$17.0 billion.
The stock has a dividend yield of 1.09% and an annualized dividend of US$0.56. It traded in the range of US$54.02 to US$40.60 in one year.
FMC Corporation (NYSE: FMC)
Market Cap: US$15.64 billion
Closing price on March 10, 2022: US$124.42
The Philadelphia, Pennsylvania-based FMC Corporation is a pure-play crop chemical company. Its crop chemical portfolio has exposure to various crops and geographies.
This agricultural company announced a regular quarterly dividend of US$0.53 per share payable on April 21, 2022, to shareholders of record on March 31, 2022.
In fiscal 2021, its revenue grew around 9% to US$5.05 billion, compared to US$4.64 billion in fiscal 2020. It posted a net income of US$734 million compared to US$550 million in the previous year.
The stock has a dividend yield of 1.77% and an annualized dividend of US$2.12. It traded in the range of US$124.94 to US$87.27 in the last 52 weeks.
Russia and Ukraine supply more than 25% of the wheat demand worldwide. Analysts expect the global nitrogen inventory to remain low in 2022 because of strong demand and lower production. Besides the war restrictions, shutdowns, high energy prices etc., impacted fertilizer production in the US, Europe, and India.