In this article, we will be taking a look at the 10 best potash stocks to buy.
Global Potash Market: Rising Demand, Key Players, and Future Growth Projections
Potash encompasses various minerals rich in potassium, primarily potassium chloride (muriate of potash), which dominates the global market. Other compounds like sulfate of potash make up the remainder of the market. As the world’s population is expected to reach over 9.7 billion by 2050, the need for potash-based fertilizers will only continue to rise.
The agricultural sector uses more than 95% of the world’s potash production, with the remainder going toward commercial and industrial goods like detergents. The US Geological Survey states that historically, a third of the world’s potash supply has come from Russia and Belarus combined.
In addition to phosphate and nitrogen, potash is necessary for crop health and is vital for plant growth. However, intensive farming depletes potash reserves, making synthetic fertilizers necessary. Potash prices skyrocketed as a result of the conflict between Russia and Ukraine, reaching a high of over $1200 per metric ton in April 2022 before falling to $328 per metric ton, which is still more than pre-Covid levels. As a result, nations like the US, Brazil, and Morocco have looked for substitute suppliers to lessen their dependency on Belarus and Russia. Grants have also been issued by the US to increase regional fertilizer production. You can also see our post on the top fertilizer stocks to purchase based on hedge funds’ 10 Best Fertilizer Stocks to Buy According to Hedge Funds for further information.
The global potash market was valued at USD 57.74 billion in 2022 and is expected to grow at a CAGR of 4.9% from 2023 to 2032, reaching USD 93.50 billion by 2032. The potassium chloride product segment dominated the market with a revenue share of 52.7% in 2022, driven by the surge in agricultural activities. The top 15 national fertilizer markets consume 78% of global potash, while 133 countries consume only 5%. Major players in the potash market include JSC Belaruskali, Compass Minerals, Mosaic Company, Uralkali, and Rio Tinto.
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Our Methodology
To rank the 10 best potash stocks, we first conducted sampling, and gathered potash stocks from relevant ETFs. We the narrowed down further based on high upside potential, strong buy analyst recommendations, and large market capitalizations. From this list, we then ranked the top 10 potash stocks according to the number of hedge fund holders in Q1 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Here is our detailed list of the 10 best potash stocks to buy.
10. ICL Group Ltd (NYSE:ICL)
Number of Hedge Fund Holders: 11
ICL Group Ltd (NYSE: ICL) is a global leader in minerals and chemicals, focusing on the potash market vital for fertilizer production. Based in Tel Aviv, Israel, ICL dominates key markets like China, Brazil, the EU, and India, capitalizing on rising global demand for potash and related fertilizer products. ICL Group (NYSE: ICL) has invested significantly in reducing carbon emissions and enhancing environmental performance, earning recognition for its responsible practices. Its bullish outlook stems from a robust market position in potash, rising demand, and potential supply shortages. As a leader in the industry, ICL is poised to benefit. Its focus on sustainability also appeals to eco-conscious investors, bolstering its stock performance.
Based on new research by two Wall Street analysts, ICL Group Ltd (NYSE: ICL) has a Moderate Sell rating. With a range of $4.50 to $6.00, the average price target is $5.25, representing a 20.41% upside from the current price of $4.36. In Q1 2024, there were 11 hedge fund holders in the company, down from 14 in the previous quarter. Two Sigma Advisors held the largest position in the company.
9. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Number of Hedge Fund Holders: 13
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is one of the top potash stocks to buy. Analysts remain bullish on SQM, citing the company’s strong position in the lithium market and growing demand for electric vehicles. Sociedad Quimica Y Minera SA (SQM) has received a moderate buy rating from 6 Wall Street analysts. The average price target is $56.05, ranging from $45.00 to $70.00, indicating an upside potential 35.13% increase from the current price of $41.48. In Q1 2024, there were 13 hedge fund holders in the company.
8. The Andersons, Inc. (NASDAQ:ANDE)
Number of Hedge Fund Holders: 16
The Andersons, Inc. (NASDAQ:ANDE) is a diversified company that operates in the trade, renewables, and nutrient and industrial sectors in the United States, Canada, Mexico, Egypt, Switzerland, and internationally. The Andersons has made several strategic acquisitions and investments to expand its business. In 2023, the company acquired a majority stake in a Brazilian fertilizer distributor, strengthening its presence in the growing South American market. The company also invested in a new state-of-the-art grain terminal in the Midwest, increasing its storage and handling capacity.
In Q1 2024, The Andersons, Inc. (NASDAQ: ANDE)’s net income attributable to The Andersons of $6 million, or $0.16 per diluted share, and the company reported EBITDA of $51 million for the quarter. President and CEO Pat Bowe stated:
“Overall, our first quarter results were fairly comparable to last year’s first quarter. Renewables doubled our 2023 results on great operating performance in our ethanol plants. We had good improvement in Nutrient & Industrial’s agricultural product lines. Trade had a tough comparison against last year’s record first quarter but posted an above average Q1 result in generally quiet ag markets.”
7. BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Holders: 25
BHP Group Limited (NYSE:BHP) is one of the world’s largest diversified mining companies, with operations spanning various commodities including copper, iron ore, coal, nickel, and potash. BHP announced a $7.7 billion investment in its Jansen potash project in Canada in November 2023, set to become one of the world’s largest potash mines. BHP Group has received a Moderate Buy rating from 7 Wall Street analysts based on recent forecasts. The average price target is $57.34, ranging from $35.36 to $68.00. This average suggests a marginal 1.06% change from the current price of $56.74.
In Q1 2024, there were 25 hedge fund holders in the company, up from 24 in the previous quarter. Fisher Asset Management held the largest position in the company with 20,501,178 shares worth $1,182,712,992, comprising 0.55% of the company’s total portfolio.
In the first half of 2024 (HY24), BHP Group Limited (NYSE:BHP) reported revenues of $27.2 billion, marking a 6% year-over-year increase driven by higher iron ore and copper prices. Profit after taxation reached $1.7 billion, with $927 million attributable to BHP shareholders. BHP achieved a 7% rise in copper production and maintained strong operational performance at its Western Australia Iron Ore operations. The company declared an interim dividend of 72 US cents per share.
6. Compass Minerals International, Inc. (NYSE:CMP)
Number of Hedge Fund Holders: 25
Global provider of vital minerals, Compass Minerals International, Inc. (NYSE:CMP) was founded in 1844 and has its headquarters located in Overland Park, Kansas. Its two primary business sectors are Plant Nutrition, which sells sulfate of potassium (SOP) products for use as agricultural inputs, and Salt, which makes deicing salt for highways.
Compass Minerals International, Inc. (NYSE:CMP) holds a portfolio of cost-advantaged assets, including the Ontario rock salt mine and brine operations at the Great Salt Lake in Utah, which can provide a competitive edge. Compass Minerals International has received a Moderate Buy rating from 4 Wall Street analysts based on recent forecasts. The average price target is $17.00, with a range from $13.00 to $23.00. This average implies a potential 60.53% increase from the current price of $10.59. In Q1 2024, there were 25 hedge fund holders in the company, up from 14 in the previous quarter. Select Equity Group held the largest position in the company with 2,944,721 shares worth $46,349,909, comprising 0.16% of the fund’s total portfolio.
5. FMC Corporation (NYSE:FMC)
Number of Hedge Fund Holders: 32
FMC Corporation (NYSE: FMC) is a leading global agricultural sciences company that provides innovative solutions to growers around the world. The company develops and manufactures crop protection products, plant health management solutions, and professional pest and turf management products. Fourteen Wall Street analysts have given FMC Corporation a Moderate Buy rating based on their most recent projections. With a range of $50.00 to $90.00, the average price target is $68.54. Based on this average, the current price of $57.08 may potentially rise by 20.08%.
In Q1 2024, 32 hedge funds held positions in the company, up from 31 in the previous quarter. Millenium Management held the largest position in the company with 1,916,454 shares worth $122,078,120, comprising 0.05% of the company’s total portfolio.
4. Nutrien Ltd. (NYSE:NTR)
Number of Hedge Fund Holders: 33
Nutrien Ltd. (NYSE:NTR) is a Canadian corporation that stands out as one of the world’s largest potash producers and retailers. The company’s diverse portfolio includes the production of potash, nitrogen, and phosphate, making it a significant player in the global agricultural industry. utrien has been investing in automation and artificial intelligence to enhance efficiency and reduce workplace injuries. The company plans to spend $15 to $20 million per year over the next 10 years to implement these technologies.
Nutrien has received a Moderate Buy rating from 15 Wall Street analysts based on recent forecasts. The average price target is $66.79, with a range from $52.00 to $80.00. This average indicates a potential 28.52% increase from the current price of $51.97. In Q1 2024, there were 33 hedge fund holders in the company, down from 39 in the previous quarter. First Eagle Investment Management held the largest position in the company with 9,571,272 shares worth $519,815,984, comprising 1.18% of the company’s total portfolio.
Nutrien Ltd. (NYSE:NTR) reported net earnings of $165 million ($0.32 diluted net earnings per share) in the first quarter of 2024. This was down from $576 million ($1.14 per share) in the same period in 2023, primarily due to lower net fertilizer selling prices and their adjusted EBITDA was $1.1 billion.
3. Vale S.A. (NYSE:VALE)
Number of Hedge Fund Holders: 34
Vale S.A. (NYSE: VALE) is a diversified global mining company and one of the world’s largest producers of iron ore, pellets, and nickel. The company also has significant operations in potash, copper, and coal. Vale has been focusing on sustainability and reducing its environmental impact. The company has set ambitious targets to reduce greenhouse gas emissions and is investing in renewable energy projects to power its operations.
Analysts are bullish on Vale’s potash business due to rising global fertilizer demand driven by population growth and the need for increased agricultural productivity. Vale’s acquisition of Potash One and ongoing investments in expanding and modernizing its potash operations position the company to capitalize on this demand. Vale SA has received a Moderate Buy rating from 12 Wall Street analysts based on recent forecasts. The average price target is $15.55, with a range from $12.70 to $18.00. This average suggests a potential 39.34% increase from the current price of $11.16.
In Q1 2024, there were 34 hedge fund holders in Vale S.A. (NYSE: VALE) with Fisher Asset Management holding the largest position in the company. Fisher held 16,255,974 shares in the stock worth $198,160,322, comprising 0.09% of the company’s total portfolio. Vale reported a proforma adjusted EBITDA of US$ 3.5 billion, in Q1 2024 which is 9% lower year-over-year (y/y) and 49% lower quarter-over-quarter (q/q). This decrease was primarily due to weaker iron ore fines realized prices and seasonally lower sales. The company’s capital expenditures for the quarter were US$ 1.4 billion, which is US$ 0.3 billion higher y/y. The Serra Sul 120 Mtpy project’s estimated CAPEX was revised upwards to US$ 2.8 billion due to higher input and services costs
2. The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holders: 38
The Mosaic Company (NYSE: MOS) is one of the world’s leading producers and marketers of concentrated phosphate and potash crop nutrients. The company operates through three segments: Phosphates, Potash, and Mosaic Fertilizantes. The company’s newest mine, Esterhazy K3 in Saskatchewan, is due to come online in 2024 and is set to be ‘the largest, most competitive underground potash mine in the world’.
Based on recent forecasts from 10 Wall Street analysts, Mosaic Co has an average price target of $33.22, with estimates ranging from $28.00 to $39.00. This suggests a potential 12.53% increase from the current price of $29.52. In Q1 2024, there were 38 hedge fund holders in the company. D E Shaw held the largest position in the company with 3,419,498 worth $110,996,906, comprising 0.09% of the fund’s total portfolio.
The Mosaic Company (NYSE: MOS) reported net earnings of $45 million in Q1 2024 or $0.14 per diluted share, and the adjusted EPS(1) for the same period was $0.65 and the Adjusted EBITDA(1) was $576 million. The company’s revenues totaled $2.7 billion in Q1, down 26% from the year-ago period due to lower selling prices. Most importantly, their potash operating earnings were $198 million in Q1, compared to $402 million last year.
1. Archer-Daniels-Midland Company (NSYE:ADM)
Number of Hedge Fund Holders: 40
Archer-Daniels-Midland Company (NYSE:ADM) is a leading global agricultural company that processes and trades agricultural commodities, providing food ingredients, animal feeds, and biofuels.
ADM’s core business segments, including agricultural and metal commodities, are poised to benefit from favorable market conditions in late 2024. Commodities typically perform well during inflation, and lower interest rates plus a weaker dollar make them more attractive globally. ADM is expanding direct-to-farmer buying and enhancing its nutritional segment to capitalize on higher commodity prices. The company has shown resilience, posting solid quarterly earnings above consensus for the fifteenth consecutive quarter and raising its dividend. With a 10% YoY EPS growth, ADM is attractively valued, offering nearly 20% upside potential based on DDM and P/E ratio analysis, and trades below its 5-year average valuation ratios.
In Q1 2024, there were 40 hedge fund holders in Archer-Daniels-Midland Company (NYSE:ADM). D E Shaw held the largest position in the company with 4,132,861 worth $259,585,000, comprising 0.225 of the company’s total portfolio. The company’s adjusted earnings per share (EPS) in Q1 2024 was $1.46, surpassing the analyst estimate of $1.36 per share, which represents a $0.20 per share increase compared to the prior year, driven by volume improvements in the Ag Services & Oilseeds (AS&O) segment. Their segment operating profit was $1,311 million on a reported basis and $1,317 million on an adjusted basis, a 24% decrease compared to the prior year.
Overall, Archer-Daniels-Midland Company ranks first among the Best Potash Stocks to Buy. You can visit 10 Best Potash Stocks to Buy to see the other potash stocks that are on the hedge fund radar. While we acknowledge the potential of potash stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Archer-Daniels-Midland but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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