We recently compiled a list of the 8 Best Fertilizer Stocks To Buy Now. In this article, we are going to take a look at where Nutrien Ltd. (NYSE:NTR) stands against the other fertilizer stocks.

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.

Our 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.

At Insider Monkey we are obsessed with 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).

Nutrien Ltd. (NYSE:NTR)

Average Upside Potential According to Analysts: 29.39%

Nutrien Ltd. (NYSE:NTR) is a major Canadian company in the agriculture and fertilizer sector. It is recognized as one of the largest producers of potash and nitrogen fertilizers globally. Nutrien Ltd. (NYSE:NTR) focuses on providing essential crop inputs and services, which include potash, nitrogen, and phosphate products for agricultural, industrial, and feed customers.

In June 2024, during its Investor Day, Nutrien Ltd. (NYSE:NTR) set ambitious targets for 2026 to enhance earnings and cash flow. According to the management, the company is currently on track to achieve $200 million in annual operational efficiencies by 2025, a year earlier than planned. This improvement will come from cost reductions across both its retail and corporate divisions.

The company aims to increase its production and sales of potash and nitrogen with minimal capital investment. By the end of the first three quarters of 2024, Nutrien Ltd. (NYSE:NTR) had already boosted sales volumes by 1.3 million tons, moving closer to its goal of increasing sales by 2 to 3 million tons compared to 2023 levels.

NTR is one of the top fertilizer stocks to buy. Over the past ten years, Nutrien Ltd. (NYSE:NTR) has grown its revenue at a compound annual growth rate (CAGR) of 15%, while its levered free cash flow has increased at a CAGR of 9% during the same period.

Analysts are also quite optimistic about NTR. Their 12-month price target suggests the stock could increase by 29% from its current level.

With a strong focus on operational efficiency and strategic growth initiatives, Nutrien Ltd. (NYSE:NTR) presents an attractive investment opportunity in the fertilizer market.

Overall NTR ranks 3rd on our list of the best fertilizer stocks to buy. While we acknowledge the potential of NTR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NTR 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 is originally published at Insider Monkey.