With inflation still weighing on the economy and consumers’ wallets, many are turning to defensive stocks — those that tend to do well regardless of how the overall market is performing — to protect their portfolios against volatility. Some industries, such as healthcare and energy, are obvious picks. Others get less attention despite being well positioned to see gains amid economic, financial and geopolitical strife. Fertilizer falls into that category.
See: 3 Things You Must Do When Your Savings Reach $50,000
Fertilizers such as potash, nitrogen and phosphates are vital agricultural products that nourish soil and crops to maximize crop yields. They also are a $193.8 billion global market, according to Statista. Russia is a major fertilizer exporter, and its invasion of Ukraine has upended that market, threatening supplies and paving the way for fertilizer producers in the U.S. and elsewhere to fill gaps.
Here’s a look at seven fertilizer stocks to consider for your portfolio.
What Are the Best Fertilizer Stocks?
GOBankingRates has compiled a list of some of the best fertilizer stocks to invest in for February 2023:
- Nutrien Ltd. (NTR)
- The Mosaic Co. (MOS)
- CF Industries Holdings Inc. (CF)
- FMC Corp. (FMC)
- American Vanguard Corp. (AVD)
- Corteva Inc. (CTVA)
- Bioceres Crop Solutions Corp. (BIOX)
The picks are based on a number of factors, including performance, market cap, price-earnings ratio, dividend yield and analyst ratings.
Nutrien Ltd. (NTR)
- Price as of Feb. 1: $83.65
- Market Cap: $44.16 billion
- P/E Ratio: 6.03
- Dividend Yield: 2.30%
- Year-to-Date Performance: 16.28%
As the world’s top potash manufacturer and one of the biggest fertilizer producers overall, according to an industry research report from Statista, Nutrien produces and distributes over 27 million tons of potash, nitrogen and phosphate products to help global clients in a variety of industries increase food production in a sustainable manner. The Canadian company boasts an agricultural retail network with over half a million grower accounts, positioning it to meet demand in international markets.
Nutrien’s third-quarter earnings fell short of analyst estimates. However, the company beat estimates in two of the last four quarters, according to Zacks, and the stock has gained 16.28% since the beginning of the year. With a low 6.03 P/E ratio and 2.30% dividend yield, Nutrien appears to be a solid value. NTR has a one-year price target of $98.90 and a “buy” rating from analysts, according to Yahoo Finance.
The Mosaic Co. (MOS)
- Price as of Feb. 1: $49.86
- Market Cap: $17.36 billion
- P/E Ratio: 4.97
- Dividend Yield: 1.65%
- Year-to-Date Performance: 16.18%
Mosaic is a mine-to-market company engaged in every aspect of crop nutrition. Mosaic produces and distributes millions of tons of potash and phosphates each year for a global customer base that includes wholesalers, retailers and growers in more than three dozen countries. Its products, which encompass both performance and commodity fertilizers, have positioned Mosaic as a major player in the industry.
In an earnings release dated Nov. 7, 2022, Mosaic reported record income for the first nine months of 2022. Revenues were up 56% for the quarter, and profits reached $842 million. The company reiterated its commitment to reducing debt by $1 billion and announced it had returned $1.8 billion to shareholders through dividends and stock buybacks. Analysts rate the stock a buy and have an average 12-month price target of $57.33.
CF Industries Holdings Inc. (CF)
- Price as of Feb. 1: $84.84
- Market Cap: $16.65 billion
- P/E Ratio: 5.55
- Dividend Yield: 1.93%
- Year-to-Date Performance: -0.16%
With nine manufacturing complexes in the U.S., Canada and the U.K. and an extensive storage, transportation and distribution network in North America, CF Industries is a leading manufacturer of hydrogen and nitrogen products. This U.S.-based company notes that its mission is to “provide clean energy to feed and fuel the world sustainably,” and it does that by using a special process to reduce reliance on limited supplies of naturally occurring nitrogen deposits. It maintains the world’s largest ammonia production network — a network it’s committed to decarbonizing to enable greener products.
CF released its earnings for the first nine months of 2022 on Nov. 2. Net sales grew 114% for that period compared to the previous year, with 70% of the gains occurring in the third quarter. Net earnings were also up for the quarter and nine-month period. Analysts rate the stock a buy. The one-year price target is $110.63, which is about 30% above the current price.
FMC Corp. (FMC)
- Price as of Feb. 1: $132.43
- Market Cap: $16.22 billion
- P/E Ratio: 22.48
- Dividend Yield: 1.75%
- Year-to-Date Performance: 3.33%
This Philadephia-based agricultural sciences company specializes in sustainable crop protection technologies. It invests heavily in developing new formulations and biologicals and boasts a robust portfolio of pest- and weed-control products in addition to fertilizers. The company offers the Arc farm intelligence app, a precision agriculture platform that alerts growers to impending pest issues. Other innovations include product and application technologies. FMC has widened its market beyond crops to include golf courses, lawn care, vegetation management and other services, particularly in North America.
FMC’s third-quarter earnings, released on Nov. 2, were down compared to a year ago but beat analysts’ estimates. Revenue also exceeded estimates despite a decline. FMC stock has an average 12-month price target of $141.88 and a consensus “buy” rating from analysts.
American Vanguard Corp. (AVD)
- Price as of Feb. 1: $22.59
- Market Cap: $667.66 million
- P/E Ratio: 24.01
- Dividend Yield: 0.53%
- Year-to-Date Performance: 4.54%
American Vanguard is the smallest company on this list by market cap, but the stock showed outstanding performance in 2022 and is still on the rise in early 2023. In addition to developing new products that support the growth and sustainability of agricultural products, American Vanguard expands its portfolio by acquiring well-established brands such as Envoke herbicide. The company, which is headquartered in California, operates a number of businesses in the U.S., Australia, Brazil, Mexico and elsewhere. The Brazilian subsidiary has recently been granted product registration for the use of Counter insecticide on soybeans in Brazil, the world’s largest agricultural market, according to a statement American Vanguard released on Nov. 2.
Of four analysts watching AVD stock, one rates it a strong buy, two rate it a buy and one rates it a hold, for a consensus recommendation of buy. The 12-month price target is $28, a 24% increase over the current price.
Corteva Inc. (CTVA)
- Price as of Feb. 1: $64.48
- Market Cap: $44.31 billion
- P/E Ratio: 37.36
- Dividend Yield: 0.93%
- Year-to-Date Performance: 5.48%
Corteva Agriscience notes that out of the major agriscience companies, it’s the only one that is entirely dedicated to agriculture. Formerly the agricultural division of DowDuPont, Corteva was spun off in 2019 to operate as an independent company with the combined strength of DuPont Pioneer, DuPont Crop Protection and Dow AgroSciences. At the time of the 2019 spinoff, Corteva had over 150 research and development facilities, over 65 active ingredients in its portfolio and a presence in over 140 countries. Its headquarters are in Indianapolis.
Corteva’s dividend yield is low but sustainable, and investors received a $0.15 dividend payment on Nov. 15. CTVA has a 12-month price target of $73.02 and an average “buy” rating from the 25 analysts who watch the stock.
Bioceres Crop Solutions Corp. (BIOX)
- Price as of Feb. 1: $12.49
- Market Cap: $796.58 million
- P/E Ratio: N/A
- Dividend Yield: N/A
- Year-to-Date Performance: 5.28%
Bioceres Crop Solutions provides crop productivity technologies, including digital decision-making solutions for growers, that support agriculture’s transition to carbon neutrality. For a relatively small company, it has a solid international presence and some impressive achievements under its belt. For example, Bioceres has over 700 trademarks and trademark applications, and it says it was the first company to achieve drought-tolerant soybean and wheat crops.
Bioceres started fiscal 2023 on a positive note, with a 71% year-over-year revenue increase. Gross profits grew 52% year over year, and earnings before interest, taxes, depreciation and amortization, or EBITDA, were nearly double last year’s quarterly result. While the company is not yet profitable, analysts are bullish on the stock, rating it a strong buy and setting an average 12-month price target of $25.42, which is 103% higher than the current price.
Are Fertilizer Stocks a Good Investment?
Fertilizer is a vital product, and fertilizer stocks can be an excellent investment. That’s especially true during times of inflation, when fertilizer stocks serve as a hedge against rising prices. Another factor in the high gains seen in all but one of the stocks in this roundup is the war in Ukraine. While the U.S. and other nations have excluded fertilizer from sanctions on Russia in order to protect food supplies, Russia suspended exports, and in the process, drove prices to record highs. While potentially devastating for growers and other stakeholders, high prices and short supplies have had a positive effect on fertilizer stocks.
Investing in stocks is always risky, and investing in individual stocks is even more so. You can offset some of that risk by investing in a mutual fund containing many stocks — the idea being that some of the fund’s stocks will be up while others are down, which reduces the impact of the down shares. The Fidelity Agricultural Productivity Fund, for example, has 26 holdings, 80% of which are securities in agricultural productivity companies. The fund’s diversity makes it a safer investment than any single stock in its portfolio.
Data was compiled on Feb. 2, 2023, and is subject to change. Information on analyst ratings was sourced from Yahoo Finance.