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 The Mosaic Company (NYSE:MOS) 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.
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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A farmer tending to his crops in a field, with a fertiliser bag nearby.
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.”
Overall MOS ranks 7th on our list of the best fertilizer stocks to buy. While we acknowledge the potential of MOS 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 MOS 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.