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In this article, we discuss 9 best fertilizer stocks to buy according to hedge funds. If you want to see more stocks in this selection, check out 5 Best Fertilizer Stocks to Buy According to Hedge Funds.
As per Vantage Market Research in a report dated July 27, the global fertilizer market will experience growth in the future given the sudden changes in crop prices, higher global nutrient demand, and the unexpected surge in energy prices. In addition to that, demand for food will multiply, driven by a growing population and this will potentially advance the growth of the fertilizer market in the years to come.
Vantage Market Research expects the global fertilizer market to reach $219.4 billion by 2028 and is forecasted to exhibit a compound annual growth rate of 2.3% during the forecast period. In 2021, the global fertilizer market was worth approximately $191.5 billion. On the basis of region, the Asia Pacific is anticipated to dominate the worldwide fertilizer market.
Russia is the world’s largest supplier of fertilizers and their primary components. It accounts for approximately 45% of the global ammonia nitrate market, 18% of the potash market, and 14% of global phosphate fertilizer exports. The Russia supply shock will inflate fertilizer and chemical prices further, given that the West and Europe are trying to cut reliance on the country. This will create upside for fertilizer firms like Nutrien Ltd. (NYSE:NTR), Corteva, Inc. (NYSE:CTVA), and The Mosaic Company (NYSE:MOS).
Our Methodology
We selected the fertilizer stocks that are most popular amongst elite hedge funds. We have mentioned the analyst ratings, business fundamentals, and future growth prospects for each firm. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
Best Fertilizer Stocks to Buy According to Hedge Funds
9. Bioceres Crop Solutions Corp. (NASDAQ:BIOX)
Number of Hedge Fund Holders: 5
Bioceres Crop Solutions Corp. (NASDAQ:BIOX) was founded in 2001 and is headquartered in Rosario, Argentina. The company specializes in crop productivity solutions. It operates through three segments – Seed and Integrated Products, Crop Protection, and Crop Nutrition. The Crop Nutrition segment develops, commercializes, and sells inoculants, bio-inductors, biological, and micro-granulated fertilizers. The company operates in Argentina, Bolivia, Brazil, the United States, Paraguay, South Africa, France, Uruguay, and internationally.
On November 10, Bioceres Crop Solutions Corp. (NASDAQ:BIOX) reported a Q1 adjusted EBITDA of $24.5 million, approximately doubling last year’s quarterly result, representing resilient top-line and gross profit growth. The revenue of $127.1 million climbed 70.6% year-over-year, topping Wall Street estimates by $45.11 million. The revenue growth was supported by ongoing outstanding performance in micro-beaded fertilizers, in addition to inoculants, adjuvants, and third-party products.
Lake Street analyst Ben Klieve on November 11 raised the price target on Bioceres Crop Solutions Corp. (NASDAQ:BIOX) to $30 from $25 and maintained a Buy rating on the shares after the company posted "its best quarter in corporate history." While he thinks some of the earnings beat was driven by the usual seasonal peak in Q2, the analyst still contended that Bioceres Crop Solutions Corp. (NASDAQ:BIOX) "remains an exceptionally well-positioned AgTech company with strong commercial tailwinds."
According to Insider Monkey’s data, 5 hedge funds were long Bioceres Crop Solutions Corp. (NASDAQ:BIOX) at the end of Q2 2022, with collective stakes worth $86.2 million, compared to 4 funds in the prior quarter worth $66.15 million. Craig Peskin and Peter Fleiss’ Solel Partners is the largest stakeholder of the company, with 4.5 million shares worth $59.6 million.
Like Nutrien Ltd. (NYSE:NTR), Corteva, Inc. (NYSE:CTVA), and The Mosaic Company (NYSE:MOS), Bioceres Crop Solutions Corp. (NASDAQ:BIOX) is one of the best fertilizer stocks to invest in.
8. The Andersons, Inc. (NASDAQ:ANDE)
Number of Hedge Fund Holders: 16
The Andersons, Inc. (NASDAQ:ANDE) was founded in 1947 and is based in Maumee, Ohio. It is an agriculture company that operates through Trade, Renewables, and Plant Nutrient segments in the United States and internationally. The Plant Nutrient segment provides fertilizers and pest control products. The Andersons, Inc. (NASDAQ:ANDE) is one of the best fertilizer stocks to invest in.
On November 1, The Andersons, Inc. (NASDAQ:ANDE) reported its Q3 results, posting non-GAAP earnings per share of $0.50 and a revenue of $4.22 billion, outperforming Wall Street consensus by $0.13 and $910 million, respectively. The revenue climbed 40.7% on a year-over-year basis.
The Andersons, Inc. (NASDAQ:ANDE) announced on November 1 the acquisition of Bridge Agri Partners, which provides ingredients to the pet food industry. This deal advances The Andersons, Inc. (NASDAQ:ANDE)’s pet food ingredient portfolio and market presence in the central northern region of the United States and Canada. Bridge Agri will operate as a wholly owned subsidiary of The Andersons, Inc. (NASDAQ:ANDE).
According to the third quarter database of Insider Monkey, 16 hedge funds held stakes worth $34.5 million in The Andersons, Inc. (NASDAQ:ANDE), compared to 15 funds in the prior quarter worth $39.5 million. George Mccabe’s Portolan Capital Management is the largest stakeholder of the company, with 264,745 shares worth $8.2 million.
7. Compass Minerals International, Inc. (NYSE:CMP)
Number of Hedge Fund Holders: 20
Compass Minerals International, Inc. (NYSE:CMP) is a Kansas-based company that produces and commercializes essential minerals in the United States, Canada, Brazil, the United Kingdom, and internationally. It operates through three segments – Salt, Plant Nutrition North America, and Plant Nutrition South America. The Plant Nutrition North America segment provides sulfate of potash specialty fertilizers in various grades.
On November 10, Compass Minerals International, Inc. (NYSE:CMP) signed a multi-year supply agreement with lithium-ion batteries maker LG Energy Solution. Compass Minerals International, Inc. (NYSE:CMP) will provide LG Energy battery-grade lithium carbonate and will deliver up to 40% of its planned, phase-one battery-grade lithium carbonate production to LG for a 6-year term. Once completely operational, Compass Minerals International, Inc. (NYSE:CMP) forecasts an annual commercial production capacity of nearly 35 kMT lithium carbonate equivalent, with an initial phase-one capacity of 11 kMT coming online by 2025.
Compass Minerals International, Inc. (NYSE:CMP) on November 15 declared a $0.15 per share quarterly dividend, in line with previous. The dividend is distributable on December 20, to shareholders of the company as of December 9.
According to Insider Monkey’s data, 20 hedge funds were long Compass Minerals International, Inc. (NYSE:CMP) at the end of Q3 2022, compared to 17 funds in the last quarter. The collective stakes held by elite funds in Q3 increased to $139.5 million from $63 million in Q2 2022. Select Equity Group is the biggest position holder in the company, with 891,967 shares worth $34.3 million.
Here is what Bernzott Capital Advisors specifically said about Compass Minerals International, Inc. (NYSE:CMP) in its Q2 2022 investor letter:
“Compass Minerals International, Inc. (NYSE:CMP): Despite a strong winter season in which salt volumes came in higher than expectations buoyed by a more normalized snowfall year, higher logistics and freight costs negatively impacted the bottom line. Within their plant nutrient segment, margins remained strong driven by strong potash pricing, however drought conditions negatively impacted overall volumes. Looking ahead, CMP should benefit from improved pricing during the upcoming salt selling season while actions taken within their plant segment to improve efficiencies should help improve overall results. Finally, the company is making progress in the development of its Lithium assets, supported by a recent offtake agreement with a leading global manufacturer of lithium-ion batteries which we believe is not reflected in the current stock price.”
6. FMC Corporation (NYSE:FMC)
Number of Hedge Fund Holders: 28
FMC Corporation (NYSE:FMC) was founded in 1883 and is headquartered in Philadelphia, Pennsylvania. It is an agricultural sciences company that offers crop protection, plant health, pest control, and turf management products. It is one of the best fertilizer stocks to monitor.
On November 1, FMC Corporation (NYSE:FMC) reported a Q3 non-GAAP EPS of $1.23 and a revenue of $1.38 billion, outperforming market estimates by $0.12 and $50 million, respectively. For full-year 2022, the company raised its revenue outlook to $5.6 billion-$5.8 billion, reflecting 13% growth at the midpoint versus 2021. This is up from the prior outlook of $5.5 billion-$5.7 billion, whereas the revenue consensus stood at $5.63 billion.
Loop Capital analyst Christopher Kapsch on November 15 upgraded FMC Corporation (NYSE:FMC) to Buy from Hold with a price target of $149, up from $132. The previous downgrade was due to his belief that the stock's valuation had gotten ahead of the story, but FMC Corporation (NYSE:FMC) has executed nicely, which has de-risked its earnings progression, the analyst told investors. He added that he now sees higher upside in FMC shares, particularly given the potential to close a valuation gap compared to Corteva, Inc. (NYSE:CTVA).
According to Insider Monkey’s data, 28 hedge funds were bullish on FMC Corporation (NYSE:FMC) at the end of the third quarter of 2022, compared to 29 funds in the preceding quarter. Ken Griffin’s Citadel Investment Group is the leading stakeholder of the company, with 1.2 million shares worth $130 million.
In addition to Nutrien Ltd. (NYSE:NTR), Corteva, Inc. (NYSE:CTVA), and The Mosaic Company (NYSE:MOS), FMC Corporation (NYSE:FMC) is one of the fertilizer stocks backed by elite hedge funds.
Here is what Miller Value Partners Deep Value Strategy has to say about FMC Corporation (NYSE:FMC) in its Q2 2022 investor letter:
“We also believe that a lot of Energy equities remain mispriced. The sector generated negative returns in four of the last six years (2015, 2017, 2018, and 2020). Even with a strong 2021 and start to 2022, the Energy sector 10-year returns at the end of the 2nd quarter are only 4.3% versus 18.7% for Technology and 13% for the overall S&P 500. Our two energy holdings – Nabors Industries (NYSE:NBR) and TechnipFMC (NYSE:FMC) – are oil service companies that recently experienced multi-year trough conditions. Given the delayed industry Capital Expenditure (“capex”) recovery, both companies have only recently seen higher utilization rates, improved pricing, higher margins, and growing backlogs. It is also important to note that their revenue isn’t directly tied to a commodity price but to industry capital spending trends. Both management teams see a multi-year positive industry capex cycle with oil prices greater than $70/share. Nabors and TechnipFMC share prices are still 75% below their 5-year highs, at low single-digit cash flow multiples, and normalized free cash flow yields in excess of 30%. Both companies have significant price-to-value gaps that offer the potential to generate very positive long-term returns.”
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Disclosure: None. 9 Best Fertilizer Stocks to Buy According to Hedge Funds is originally published on Insider Monkey.
