In this article, we will explore the 8 best fertilizer stocks to buy now.
An Overview of the Fertilizer Industry
The fertilizer industry is a crucial sector in agriculture that focuses on the production and distribution of substances that enhance plant growth. By supplying necessary nutrients, fertilizers help improve crop yields and quality, which are essential for feeding the growing global population.
The industry has evolved significantly over time, with modern practices relying heavily on chemically manufactured fertilizers to support large-scale farming and meet the global demand for food. According to Mordor Intelligence, the global fertilizer market is estimated to have reached a value of $381.7 billion in 2024. Looking forward, the market is expected to grow at a compound annual growth rate (CAGR) of 5.99% during 2024-2030 to reach $541.2 billion by the end of the forecast period.
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There is a strong sense of optimism within the industry. The Fertilizer Institute’s 2023 Industry Trends Survey highlighted a positive outlook within the fertilizer sector, with many respondents expressing confidence in future growth. About 40% of those surveyed believe that market conditions have improved over the past five years, despite challenges like the COVID-19 pandemic and supply chain disruptions. Companies attribute their resilience to strategic practices such as precommitment purchases and careful planning. Nearly 80% of participants are optimistic about their businesses being equally or more profitable in the next five years.
The fertilizer industry is currently experiencing several key trends that are shaping its future. Advances in technology are transforming how fertilizers are produced and applied. Innovations such as precision agriculture, which uses data analytics and sensors, help farmers optimize fertilizer usage based on specific soil conditions and crop needs.
Additionally, there is a growing demand for fertilizers that offer more nutrients while reducing their environmental impact. The emphasis on maximizing the efficiency of fertilizer application to promote sustainable farming practices is increasing, which is driving the development of new and innovative solutions.
On August 13, CNBC reported that Windfall Bio, a California-based startup, is addressing methane emissions using “mems,” or methane-eating microbes. These microbes naturally consume methane and convert it into fertilizer. This innovative approach helps reduce harmful methane from sources like agriculture, landfills, and oil production. Farmers can use the fertilizer produced, while companies generating waste methane can sell it back to Windfall, creating a new revenue stream.
These trends indicate a dynamic shift in the fertilizer industry, balancing the need for increased food production with environmental sustainability and innovation.
With this background in mind, let’s take a look at the 8 best fertilizer stocks to buy now.
A farmer carrying a bag of fertilized over his shoulder signifying the fertilizers the company produces.
Methodology
To compile our list of the 8 best fertilizer stocks to buy now, we used the Finviz and Yahoo stock screeners to find the largest fertilizer companies. We also reviewed our own rankings and consulted various online resources to compile a list of the best fertilizer stocks.
We carefully verified our list to remove any companies that can not be classified as fertilizer stocks. From an initial pool of over 15 fertilizer stocks, we focused on the stocks that analysts believe possess the greatest potential for growth. Finally, we ranked the 8 best fertilizer stocks to buy now based on their average price target upside potential according to analysts, as of November 18, 2024.
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8 Best Fertilizer Stocks To Buy Now
8. The Scotts Miracle-Gro Company (NYSE:SMG)
Average Upside Potential According to Analysts: 5.56%
The Scotts Miracle-Gro Company (NYSE:SMG) is a major marketer of branded consumer lawn and garden products, including fertilizers, plant foods, and grass seed. SMG ranks among the best fertilizer stocks to buy now.
In recent years, the company faced significant challenges, including high debt and a cost structure that became unsustainable after pandemic-driven demand. However, The Scotts Miracle-Gro Company (NYSE:SMG) took decisive actions to address these issues. The company cut over $400 million in operating expenses and streamlined its Hawthorne Gardening Company to make it smaller and more profitable. These efforts allowed the company to maintain its dividend and avoid issuing additional shares.
Fiscal 2024 marked a turning point for the company as it shifted from crisis management to focusing on future growth. The Scotts Miracle-Gro Company (NYSE:SMG) achieved adjusted EBITDA growth of 20%, reaching $539 million, despite a challenging lawn and garden market.
In the fourth quarter of 2024, which ended on September 30, The Scotts Miracle-Gro Company (NYSE:SMG) reported total net sales of $414.7 million, an 11% increase year-over-year. Sales in the US Consumer segment rose by 54%, reaching $309.7 million compared to $201 million in the same quarter last year. This growth was largely due to improved shipment timing compared to the prior year.
Looking ahead, the company plans to invest at least $200 million annually in advertising and marketing to drive consistent growth of around 3% each year. The Scotts Miracle-Gro Company (NYSE:SMG) aims to improve gross margins to the mid-30% range and reduce leverage to approximately 3x by the end of fiscal 2027.
In fiscal year 2025, The Scotts Miracle-Gro Company (NYSE:SMG) plans to expand its Miracle-Gro Organic line to offer a complete range of products, including plant food and soils for both indoor and outdoor use. The company aims to take a more aggressive stance against competitors by enhancing advertising, introducing new branded solutions, and pursuing strategic mergers and acquisitions where it makes sense financially. Additionally, the company will launch a new O.M. Scotts & Son natural lawn fertilizer and grass seed, featuring eco-friendly packaging made from curbside recyclable paper. This initiative emphasizes the company’s commitment to sustainability and its mission to promote better gardening practices.
With a strong commitment to innovation and efficiency, along with a clear strategy for growth, The Scotts Miracle-Gro Company (NYSE:SMG) is well-positioned for future success.
7. The Mosaic Company (NYSE:MOS)
Average Upside Potential According to Analysts: 16.23%
The Mosaic Company (NYSE:MOS) is one of the world’s largest producers and marketers of concentrated phosphate and potash fertilizers. As a single-source provider, the company plays a crucial role in the agriculture industry, helping farmers maintain healthy soils and maximize crop yields. The Mosaic Company (NYSE:MOS) mines, produces, and distributes millions of tonnes of high-quality fertilizers each year.
In its third quarter of 2024, the company reported revenues of $2.8 billion, a decrease of 21% compared to the same quarter last year, largely due to lower selling prices. However, The Mosaic Company (NYSE:MOS) achieved a net income of $122 million in Q3 2024, recovering from a net loss of $4 million in Q3 2023. This improvement reflects the resilience Mosaic has built over time, allowing it to bounce back from recent weather-related disruptions.
The Mosaic Company (NYSE:MOS) is focused on strategic capital allocation and has made significant progress on projects that require low capital investment but offer high returns. The completion of the 800,000-tonne Riverview MicroEssentials capacity conversion and the 500,000-tonne Esterhazy potash compaction project in the second quarter has positioned the company well for future growth.
The Esterhazy Hydrofloat project is set to enhance milling capacity by 400,000 tonnes by mid-2025. The Mosaic Company (NYSE:MOS) also expects the construction of a 1 million-tonne blending facility in Palmeirante, Brazil to be completed in the third quarter of 2025.
The company is working on cost reduction initiatives aimed at achieving a $150 million run rate by the end of 2025. For 2024, The Mosaic Company (NYSE: MOS) is set to lower its capital expenditures by $200 million from the 2023 level.
Furthermore, The Mosaic Company (NYSE:MOS) has returned $415 million to shareholders in the first nine months of 2024. This includes share repurchases totaling $210 million.
With its strong market position, ongoing improvements in operational efficiency, and commitment to shareholder returns, The Mosaic Company (NYSE:MOS) presents an attractive investment opportunity in the fertilizer sector.
As of the third quarter of 2024, The Mosaic Company (NYSE:MOS) was held by 34 hedge funds, according to Insider Monkey’s database. Ariel Investments stated the following regarding The Mosaic Company (NYSE:MOS) in its “Ariel Focus Fund” third-quarter 2024 investor letter:
“Lastly, producer and marketer of crop nutrients, The Mosaic Company (NYSE:MOS), fell in the period on weaker than expected potash and fertilizer pricing as well as a decline in phosphate sales volumes. Electrical equipment failures and weather-related headwinds due to Hurricane Helene also weighed on shares. Management expects pricing to improve as growers continue to be incentivized to maximize yields by applying fertilizers. MOS is focused on cost discipline, free cash flow generation and paying down debt, while continuing to return significant capital to shareholders through buybacks. Given management’s disciplined capital allocation, we continue to believe the company is well positioned.”
