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Stock of the Week: Nutrien

The latest hot commodity.

Andrew Willis 19 July, 2021 | 1:48AM
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Andrew Willis: Whether it's because we're having a hot summer, or farmers are simply catching up with the post lockdown surge. The rising demand for fertiliser has the world's largest crop nutrient company, increasing its forecast and production by half a million metric tonnes.

It also has us raising our fair value estimate for Canada's own Nutrien. It's only an increase of a couple of dollars, but it's on a sound balance sheet, steady retail cash flow and a decent dividend at around 3% at the end of June. Senior Equity Analyst Seth Goldstein says that globally farmers are using more fertiliser to maximise crop yields and profits and make use of the growing season.

To make the fertilisers Nutrien needs to ramp up potash production, especially when a competing mine has shut down. We think the company can increase its volumes in light of the flooding at Mosaic's mine in Saskatchewan, which will support strong profits for Nutrien for several years ahead. And that beats betting on the weather.

For Morningstar, I'm Andrew Willis

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Nutrien Ltd105.65 CAD-1.22Rating

About Author

Andrew Willis

Andrew Willis  is Content Editor for Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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