Performance is a rocket! In addition to oil, the stock price of this industry is also ignited

In the context of global inflation, oil, as the king of commodities, took the lead in rising, and the entire industry sector is accelerating “money printing”. Even Buffett, who has rarely shot in the past few years, is buying oil companies with a lot of money.

At the same time, under the outbreak of the Russian-Ukrainian war, Russia, a major fertilizer country, announced that it would stop the export of fertilizers, and it also choked the lifeline of the industry on the supply side.

In the face of rare super-macro year, chemical fertilizers, as one of the few industries that can realize cost transmission, naturally earn excess profit returns.

It can be seen that the three major fertilizer industry stocks in North America, $US Mosaic (MOS.US)$ , $Nutrien (NTR.US)$ , $CF Industrial Holdings (CF.US)$ , rose sharply against the trend in the first quarter, It outperformed the S&P 500 by a large margin; Legg Mason doubled at the highest point in the year.

Under the circumstance of shrinking supply and strong demand, what kind of performance have the various fertilizer stocks achieved this year?

Not afraid of the rising cost of crude oil? Fertilizer stocks achieve bumper profits

Judging from the quarterly reports disclosed by various companies, this year’s performance can be described as riding a rocket!

Legg Mason’s first-quarter revenue was US$3.922 billion, a year-on-year increase of 70.75%, and net profit attributable to the parent was US$1.182 billion, a year-on-year increase of 654%.

The revenue of CF Industrial Holdings in the first quarter was US$2.868 billion, a year-on-year increase of 173.66%, and the net profit attributable to the parent was US$883 million, a year-on-year increase of 484%.

Nutrien’s first-quarter revenue was US$7.657 billion, a year-on-year increase of 64.38%, and the net profit attributable to the parent was US$1.378 billion, a year-on-year increase of 985%.

And Nutrien, the world’s largest fertilizer company, took the lead in raising its outlook for profit growth and cash flow, saying that as fertilizer prices soared, they planned to sell more potash fertilizers; the company adjusted in its first-quarter report on May 2. The new full-year forecast is for EPS of $16.20 to $18.70, up from the previous target of $10.20 to $11.80.

Nutrien and other fertilizer companies will benefit from record prices as most of the world’s fertilizer supply is threatened due to sanctions imposed on major fertilizer exporters Russia and Belarus due to the Russian-Ukrainian war.

What will management and analysts think of skyrocketing fertilizer prices?

Expected difference? Analysts to the left, management to the right

According to Tony Will, CEO of CF Industrial Holdings, after the Russia-Ukraine conflict, it will take at least two to three years for the world to replenish global grain stocks, which is a very strong support for grain prices;

This has caused global fertilizer stocks to be “extremely tight”, and farmers’ demand for fertilizers is very strong, and they want to profit from rising food prices;

In response to strong market demand, the company shipped its highest quarterly volume of nitrogen fertilizers by rail in North America in a decade and hired three times the usual number of U.S. ships to deliver liquid nitrogen to U.S. shores.

The company is currently building a new factory worth $2 billion.

Judging from the current market analysis, among the 15 analysts in the US stock price forecast, 7 recommend buying, 8 recommend holding, and the expected price is US$71.5, which is 11.63% higher than the current price. .

For CF Industrial Holdings, 5 out of 15 analysts recommend a buy and 10 recommend a hold, with an expected price of $103.14, a 3.33% upside from the current price.

For Nutrien, 13 out of 19 analysts recommend a buy and 6 recommend a hold, with an expected price of $108.09, a 4.14% upside from the current price.

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