We came across a bullish thesis on Compass Minerals International, Inc. (CMP) on Substack by Dominick D’Angelo. In this article, we will summarize the bulls’ thesis on CMP. Compass Minerals International, Inc. (CMP)’s share was trading at $9.56 as of March 28th. CMP’s forward P/E was 15.67 according to Yahoo Finance.

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Compass Minerals is a dominant player in the essential minerals industry, with a strong presence in North America, the U.K., and Brazil. The company’s Salt segment, contributing 83% of revenue, includes highway deicing salt, industrial salts, and consumer salts, backed by assets like the world’s largest underground salt mine in Goderich, Ontario, and the Cote Blanche mine in Louisiana. Its strategic distribution network ensures a competitive edge, while the Plant Nutrition segment, accounting for 17% of revenue, focuses on sulfate of potash (SOP), a high-value fertilizer produced cost-effectively through solar evaporation at the Great Salt Lake facility. This segment benefits from a streamlined focus following the divestment of non-core businesses, allowing Compass to serve key agricultural markets efficiently.
Despite its industry leadership, Compass has faced setbacks, including a failed lithium extraction initiative, the costly and ultimately abandoned Fortress North America acquisition, and a disruptive ceiling collapse at the Goderich mine in 2017. Additionally, increased competition from Morton Salt’s acquisition by Stone Canyon Industries and pricing pressure from imported salt in coastal markets have challenged profitability. However, Compass has taken significant steps to improve operations, refocusing on core businesses and implementing cost reduction strategies to stabilize financial performance.
The company’s stock has been weighed down by high leverage, management turnover, and a weak start to the 2025 winter season, where mild weather led to a 12.7% decline in salt volumes through Q1 and lower highway salt pricing. To mitigate these challenges, Compass curtailed production at Goderich, optimized working capital, and unlocked an $80M accounts receivable release, setting the stage for a $180M free cash flow tailwind. While early winter conditions were unfavorable, Q2 2025 saw a turnaround, with record snowfall in Rochester, NY, and regional salt shortages benefiting Compass. Competitor American Rock Salt struggled to meet demand, and Compass secured a $56M contract to supply Buffalo, NY, at premium pricing, positioning the company for a significant revenue boost.
With these tailwinds, Compass’s earnings outlook is improving, and management’s renewed focus on operational efficiency should drive further cost reductions. The company expects to repay $120M in debt by Q3 2026, easing balance sheet concerns, while lower energy and freight costs provide margin tailwinds. Compass’s stock could also benefit from strategic actions, as Reuters reported discussions with private equity firms regarding a potential sale. Beyond deicing salt, Compass is expanding into higher-margin pet-safe salt products, capitalizing on rising pet ownership trends and leveraging its specialized blending facilities.
Looking ahead, several catalysts could support a higher stock price for Compass Minerals, including strong Q2 earnings, upward revisions to analyst estimates, and improved free cash flow generation. While challenges such as unpredictable weather patterns and emerging competition from Atlas Salt’s planned mine by 2030 pose risks, Compass remains well-positioned due to its market dominance, ongoing cost-cutting measures, and efforts to strengthen its balance sheet. These strategic improvements, coupled with favorable industry dynamics, suggest a promising outlook for the company, with a potential target price of $14.01 by the end of 2027.
Compass Minerals International, Inc. (CMP) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held CMP at the end of the fourth quarter which was 29 in the previous quarter. While we acknowledge the risk and potential of CMP as an investment, our conviction lies in the belief that some 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 CMP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.