Best Fertilizer Stocks To Buy In May

Key Insights

• Demand for fertilizer stocks remains strong after the recent pullback. 
• Earnings estimates continue to move higher as analysts realize that high fertilizer prices would be sustainable. 
• The market has not priced in the potential upside from high prices, and leading fertilizer stocks are trading at attractive valuation levels. 

While S&P 500 continues to trade near yearly lows, the upside trend in fertilizer stocks remains strong. This not surprising given the bullish sentiment in agricultural markets.

Nutrien

Nutrien has recently released its first-quarter earning report, missing analyst estimates on earnings. Nevertheless, earnings estimates continued to move higher.

Currently, analysts expect that Nutrien will report earnings of $15.89 per share in 2022 and $12.46 per share in 2023, so the stock is trading at roughly 8 forward P/E, which is cheap for the current market environment.

The bullish outlook for fertilizer markets and the increasing attractiveness of low-PE assets amid rising yields could provide more support to Nutrien stock and push it back to the yearly highs near the $117 level.

Mosaic

The recent quarterly report from Mosaic has also missed analyst estimates. The company reported revenue of $3.92 billion and adjusted earnings of $2.41 per share.

As in Nutrien’s case, earnings estimates continued to move higher. Mosaic is expected to report earnings of $13.61 per share in 2022 and $10.31 per share in 2023, so the stock is trading at just 6 forward P/E, which is extremely cheap.

It looks that the market is worried that fertilizer prices will pull back in the second half of the year, so traders are not ready to assign better valuation to Mosaic. However, the current valuation levels look too cheap, and there is enough room for multiple expansion, which could push the stock closer to its recent highs near the $80 level.

For a look at all of today’s economic events, check out our economic calendar.