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Fertilizer Stocks Continue To Rise On Commodity Pricing Pressure

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by Daniel Shvartsman

Investing.com - Fertilizer stocks rose on Wednesday as continued pressure on commodity costs knocked into the vital agricultural sector.

CF Industries (NYSE:CF) set a new 52-week high, rising 4.3% in mid-day Wednesday trading. Mosaic Co (NYSE:MOS) was right behind with a 3.5% jump today, while Intrepid Potash (NYSE:IPI) traded up 3% and CVR Partners (NYSE:UAN) was up 2.6%.

The continued strength comes as European wholesale energy prices continued to hit new highs due to shortages and plant closures. Energy pricing has been a driver for higher fertilizer pricing, and these companies have been reaping the benefits. CF increased their guidance on their most recent earnings call, citing the strength in the strong global nitrogen market. Piper Sandler initiated coverage on CF Industries with an Overweight tag last week, citing the broader market's inherent skepticism that this agriculture cycle would follow the 2007-2009 period, and stating that the skepticism was misguided.

Mosaic meanwhile reported 71% sales growth in November vs. 2020, and did so on reduced Potash and Potassium volume (though Mosaic Fertilizantes volume were up meaningfully). Intrepid Potash for its part is trading near where it did after a Q3 earnings miss, and CVR Partners is 7% off 52-week highs.

InvestingPro's fair value estimates for these stocks suggests upside in CF Industries (fair value estimate of $82.76 for 15% upside), Mosaic (fair value estimate of $53.74 for 38% upside), and Intrepid Potash ($53.07 fair value estimate, 24% upside), with a lower fair value estimate for UAN Partners ($68.09 vs. the current $81 share price). Sell-side analysts see the most upside in Mosaic, with about 18% potential upside.

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