And management is confident enough over its near-term prospects that it was recently announced a $400 million share repurchase plan at the end of February, that's mostly completed. Consequently, on a day-to-day trade, there's going to continue to be a lot of volatility on the back of news flow and headlines.īut there's an undeniable trend here that's just getting started. Meanwhile, clearly, there's a lot of interest from speculators in this space.
It's going to take time for the chips to fall. We may make some adjustments to how fertilizer supply reaches the market, but one thing is sure, there's a meaningful amount of supply disruption and that's not getting solved quickly. Allow me to make something crystal clear, we are not going back to normal. So, even if there is a ceasefire tomorrow, I thoroughly expect that these sanctions are going to remain in place for a while.įor now, the market is still under the illusion that everything will go back to normal. We also know that Belarus typically exports approximately 17% of the global potash supply. Ultimately, we know that there's going to be a massive demand for potash. Now through Russian and Belarus sanctions, this has rapidly escalated into a total mess. Russia's invasion of Ukraine has destabilized what was already an undersupply of fertilizer in the market. If you follow this space you know the dynamics at play. Thus, there are good reasons to suspect that analysts will end up raising their revenue targets. Therefore, it's not inconceivable that analysts end up further raising their Q4 2022 outlook over the coming weeks and months. In fact, as you can see above, since October, analysts have been consistently increasing their estimates with Q1 2022 estimates having been increased by 50% in the past six months. Indeed, it's likely that could see a massive increase in estimates as the months progress. However, I contend that we are still way too early in the year to have any sort of prediction into how the back end of 2022 is going to unfold. On the other hand, at the back end of this year, analysts predict that the spike in near-term revenues dissipates. What's more, looking ahead, at least over the next couple of quarters, analysts are expecting Mosaic's revenue growth rates to remain elevated. Revenue Growth Rates Likely to Remain HighĪs you can see above, Mosaic's Q4 2021 just reported 56% y/y revenue growth. This is what both Mosaic and CF Industries ( CF) have recently stated.įurthermore, with food prices rapidly rising, this justifies further use of fertilizer for nutrient application.Ĭonsequently, for investors in this space, there are several positive elements that are going to lead to share price increases in the near term.
Why?īecause fertilizer stock is at a decade low. As you can see above the demand for fertilizer companies is sizzling hot. The above graphic illustrates a few US-based publicly traded companies. Investment Sentiment Facing Fertilizer Companies Data by YCharts I make the case that many factors appear to indicate that the macro environment here is favorable, but valuations also make sense.įurthermore, management isn't wasting its time as Mosaic has recently announced a share repurchase program, clearly a sign of management's confidence in its near-term prospects. Of course, there's a lot of uncertainty, as there always is in these scenarios, such as for how long will fertilizer shortages persist?Īlso, does Mosaic's share price round trip to where it was a few months ago, or in actuality, the ''this time it's different'' mantra, truly means that this time it's different? Particularly in the very near term, this is a hot market. Mosaic ( NYSE: MOS) is well-positioned to embrace the high demand for fertilizers this year. MaRRitch/iStock via Getty Images Investment Thesis
0 kommentar(er)
