In this piece, we will take a look at the 11 best fertilizer stocks to buy according to analysts. If you want to skip our overview of the global fertilizer industry, then you can take a look at the 5 Best Fertilizer Stocks To Buy According To Analysts.
The fertilizer industry can very well be said to be one of the oldest in the world. The ability of human beings to thrive as a species is linked to collective farming, as the first civilizations were made of people able to coalesce around rivers and other sources of water to grow crops. Since then, the sector has enjoyed the benefits of humanity’s progress and grown considerably in volume and value.
Fertilizer stocks are typically classified as firms that provide agricultural inputs to farmers. This broader category also includes pesticides, which are chemicals that help plants fight off attacks against external and internal elements like diseases and insects. At the heart of the global fertilizer industry and stocks is the element Nitrogen, as it makes up some of the most commonly used fertilizers in the world, such as ammonia and urea.
Additionally, while the global fertilizer industry benefits from using advanced manufacturing processes such as The Haber Process, advances in manufacturing and computing technology have also led to farmers being able to use less fertilizer. For instance, a report from McKinsey & Company tells us that since the application of fertilizers to prepared soil is a relatively simple process, machines are able to evenly spread out the raw material over the soil to prevent wastage.
If we’re to include these industrial automation stocks in our list of the best agricultural stocks, then the list becomes quite diverse. For instance, in the traditional sense of thinking, one of the world’s biggest fertilizer and nitrogen stocks is the Canada based nitrogen and fertilizer company, Nutrien Ltd. (NYSE:NTR). Nutrien produces millions of tons of phosphate, nitrogen, and other fertilizers.
In the industrial automation fertilizer space, the Moline, Illinois based industrial equipment company Deere & Company (NYSE:DE) is a notable name. Deere has a market capitalization of $107 billion and several liquid and dry nutrient fertilizer applicators in its product portfolio. It complements these by offering a variety of accessories such as sprayers, and while these might be typically thought of as fertilizer equipment, as we’ll explain below, they play a crucial role in agriculture and justify why NYSE:DE can also be categorized as a fertilizer stock.
For instance, Deere’s ExactShot planting technology touted reducing the need for fertilizer by as much as 60% at the time of its launch last year by placing starter fertilizer directly on top of seeds during the time of planting instead of applying fertilizer in bulk.
As a whole, fertilizer stocks are dependent on global supply chains, and as opposed to high growth stocks such as those belonging to the technology sector, they also provide investors with comfort during turbulent economic times. To understand the factors that drive their performance, it can be worthwhile to look at what the professionals are saying. One way to find out institutional investor sentiment is to look at investor letters. And as luck would have it, Insider Monkey painfully compiles investor letters every quarter such as those for the third quarter and fourth quarter of 2023.
One such fertilizer stock hedge fund investor letter comes from White Brook Capital Partners. The firm commented on the shares of the Tampa, Florida based fertilizer stock The Mosaic Company (NYSE:MOS), as it shared:
“Mosaic (MOS) and Green Plains (GPRE), our commodity-sensitive investments, remain substantial positions in the portfolio. The companies are a natural hedge to each other in some ways, as the price of corn is a feedstock for Green Plains while it bolsters the purchasing power of Mosaic’s customers. On the other hand, higher oil prices are a positive for Green Plains, while the opposite is true for Mosaic.
The Mosaic thesis didn’t change during 2023. The world’s potash and phosphate needs grow at a ~2% CAGR, and the price for potash and phosphate, which declined from Covid peaks during 2023, is likely to be at least stable in 2024. Mosaic continues to generate substantial free cash flow on a business with lessening capital intensity, and the balance sheet has a very manageable debt load. The Company’s CEO, Jack O’Roarke, announced his retirement at the end of 2023, but I expect the company to go from strength to strength as long-time heir apparent Bruce Bodine leads the company in 2024. I believe the company will continue to return capital to shareholders through enhanced stock buybacks while investing in high-return brownfield opportunities that will continue to grow long-term free cash flow per share. Additionally, should battery manufacturers adopt more phosphate in their batteries as Tesla and Ford have begun to do, it could significantly change the demand dynamics of one of its two products and ensure Mosaic’s significant cash flows years into the future.”
With these details in mind, let’s take a look at some of the best fertilizer stocks that hedge funds are laying their hands on. A couple of notable picks are Bioceres Crop Solutions Corp. (NASDAQ:BIOX), American Vanguard Corporation (NYSE:AVD), and Lavoro Limited (NASDAQ:LVRO).
A farmer working in a field with the latest farm machinery and tools.
Our Methodology
To make our list of the best fertilizer stocks, we ranked all fertilizer manufacturers and industrial application equipment providers by the average percentage analyst share price target upside and picked out the top fertilizer stocks.
For these best fertilizer stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Best Fertilizer Stocks To Buy According To Analysts
11. ICL Group Ltd (NYSE:ICL)
Number of Q4 2023 Hedge Fund Shareholders: 14
Share Price Target Upside: 6.35%
Latest Average Share Price Target: $5
ICL Group Ltd (NYSE:ICL) is an Israeli company that plays an important role in the global phosphate fertilizer industry. The firm has done well on the financial front as of late by having beaten analyst EPS estimates in three out of its four latest quarters.
After digging through 933 hedge fund portfolios for last year’s fourth quarter, Insider Monkey found 14 ICL Group Ltd (NYSE:ICL) shareholders. It joins American Vanguard Corporation (NYSE:AVD), Bioceres Crop Solutions Corp. (NASDAQ:BIOX), and Lavoro Limited (NASDAQ:LVRO) in our list of the best fertilizer stocks to buy according to analysts.
10. Deere & Company (NYSE:DE)
Number of Q4 2023 Hedge Fund Shareholders: 54
Share Price Target Upside: 8.48%
Latest Average Share Price Target: $418
Deere & Company (NYSE:DE) is one of the biggest farming equipment companies in the world. Not only does this lend the stock an aura of stability, but this is further beefed up by the fact that nearly 80% of Deere & Company (NYSE:DE)’s shares are held by institutional investors.
As of Q4 2023 end, 54 out of the 933 hedge funds tracked by Insider Monkey had invested in the company. Michael Larson’s Bill & Melinda Gates Foundation Trust was the biggest Deere & Company (NYSE:DE) shareholder due to its $1.4 billion stake.
9. Corteva, Inc. (NYSE:CTVA)
Number of Q4 2023 Hedge Fund Shareholders: 51
Share Price Target Upside: 11.31%
Latest Average Share Price Target: $61
Corteva, Inc. (NYSE:CTVA) is a diversified agricultural raw material company that sells products such as nitrogen stabilizers. The shares are rated Buy on average, and the average analyst share price target is $11.31.
By the end of Q4 2023, 51 out of the 933 hedge funds profiled by Insider Monkey had bought a stake in Corteva, Inc. (NYSE:CTVA). Natixis Global Asset Management’s Harris Associates owned the biggest stake which was worth $431 million.
8. CNH Industrial N.V. (NYSE:CNHI)
Number of Q4 2023 Hedge Fund Shareholders: 29
Share Price Target Upside: 15.45%
Latest Average Share Price Target: $14
CNH Industrial N.V. (NYSE:CNHI) is one of the biggest industrial equipment companies in the world. Its vast product portfolio also includes agricultural equipment such as seeders. The shares are rated Buy on average, and the average analyst share price target is $14.27.
As of Q4 2023 end, 29 out of the 933 hedge funds part of Insider Monkey’s database had held a stake in the firm. CNH Industrial N.V. (NYSE:CNHI)’s biggest hedge fund investor in our database is Natixis Global Asset Management’s Harris Associates due to its $1.9 billion investment.
7. The Mosaic Company (NYSE:MOS)
Number of Q4 2023 Hedge Fund Shareholders: 43
Share Price Target Upside: 16.57%
Latest Average Share Price Target: $38
The Mosaic Company (NYSE:MOS) is a pure play fertilizer company headquartered in Tampa, Florida. Its stock hasn’t seen much love recently due to price depression in the fertilizer industry. However, the shares have started on an upward trajectory as of late after trading near 52 week lows in February 2024.
For their fourth quarter of 2023 investments, 43 out of the 933 hedge funds covered by Insider Monkey’s research had bought The Mosaic Company (NYSE:MOS)’s shares. Cliff Asness’s AQR Capital Management was the largest shareholder due to its $115 million investment.
6. Alamo Group Inc. (NYSE:ALG)
Number of Q4 2023 Hedge Fund Shareholders: 14
Share Price Target Upside: 17.45%
Latest Average Share Price Target: $237
Alamo Group Inc. (NYSE:ALG) is a mid sized industrial heavy equipment company that also makes and sells fertilizer applicators. It is one of the highest rated stocks on our list, as the average share rating is Strong Buy.
By the end of last year’s December quarter, 14 out of the 933 hedge funds tracked by Insider Monkey were Alamo Group Inc. (NYSE:ALG)’s investors. James A. Star’s Longview Asset Management owned the largest stake which was worth $286 million.
Bioceres Crop Solutions Corp. (NASDAQ:BIOX), Alamo Group Inc. (NYSE:ALG), American Vanguard Corporation (NYSE:AVD), and Lavoro Limited (NASDAQ:LVRO) are some top analyst fertilizer stock picks.
Click to continue reading and see 5 Best Fertilizer Stocks To Buy According To Analysts.
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Disclosure. None. 11 Best Fertilizer Stocks To Buy According To Analysts was initially published on Insider Monkey.