In this article, we will take a look at the 10 best potash stocks to buy.
Potash refers to a group of different minerals and chemical compositions that bear the potassium element in substantial quantities. The potassium chloride compound, known commonly as the muriate of potash accounts for the majority of the global potash market with other compounds such as sulphate of potash accounting for the rest.
More than 95% of the global potash production is utilized for agricultural purposes with the remaining amount employed for manufacturing commercial and industrial products such as detergents. According to the US Geological Survey, Russia and Belarus combined have accounted for a third of the global potash supply over the years.
The Russia-Ukraine conflict and resulting sanctions led to pressures on the global potash supply chain. The list of other leading potash producing countries includes Canada, China, and Germany, among others. You can read more about the leading potash producing countries in our article, 15 Largest Potash Producing Countries in the World.
In addition to Phosphorus and Nitrogen, Potash is among the three most important nutrients for optimal crop health and production. These elements, together known as ‘NPK’, are the only macronutrients required by plants for healthy growth. Even though these resources are naturally available in soil, excessive and repetitive farming reduces their quantities in the soil at a pace much faster than the time required for their natural replenishment. This necessitates the need for synthetically produced fertilizers.
In the aftermath of the Russia-Ukraine conflict, the prices for potash increased manifold all across the world. Potassium Chloride prices hit their peak in April 2022 as they exceeded $1200 per metric ton. The prices have since dropped significantly and were recorded at $328 per metric ton which is still higher than the Covid-era prices, according to data from the World Bank.
Several countries including the United States have taken measures to reduce their reliance on Russia and Belarus for their fertilizer imports. For instance, Brazil chose Canada as an alternate source for its potash requirements while Morocco opted for Egypt and Saudi Arabia as alternatives for its ammonia requirements. United States announced grants focused on increasing local production of fertilizers. You can read more about this in our recent article, 10 Best Fertilizer Stocks to Buy According to Hedge Funds.
Some of the best potash stocks to buy include The Mosaic Company (NYSE:MOS) – a leading American producer of potash, Archer Daniels Midland Company (NYSE:ADM) – a leading American diversified agricultural services company, and Nutrien Ltd. (NYSE:NTR) – a Canadian fertilizer company which is the largest producer of potash by capacity, among others.
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Methodology
We used stock screeners to identify the companies that operate in the production or sale of potash and shortlisted the stocks with growth catalysts, strong fundamentals, and positive market sentiment. The final step involved the ranking of the identified list of stocks based on their popularity among the top hedge funds tracked by Insider Monkey.
10 Best Potash Stocks to Buy
10. Intrepid Potash, Inc. (NYSE:IPI)
Number of Hedge Fund Holders: 8
Denver, Colorado-based Intrepid Potash, Inc. (NYSE:IPI) is a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products for applications in agriculture, animal feed and the oil and gas industry. It is the only U.S. producer of muriate of potash and produces a specialty fertilizer that combines potassium, magnesium, and sulfate, in a single particle.
On June 21, Intrepid Potash, Inc. (NYSE:IPI) announced successful completion of phase one of its HB Injection Pipeline Project. The project, once phase 2 is completed, is expected to more than triple the injection rate of brine into the cavern system which would ultimately lead to a significant increase in potash production.
Intrepid Potash, Inc. (NYSE:IPI) shares were owned by 8 prominent hedge funds with total value of the shares held by the hedge funds valued at $21 million, as of March 31, 2023. CastleKnight Management, Two Sigma Advisors, and AQR Capital Management, were the top 3 hedge fund shareholders of the stock with ownership of nearly $5 million worth of shares each.
9. Compass Minerals International, Inc. (NYSE:CMP)
Number of Hedge Fund Holders: 15
Compass Minerals International, Inc. (NYSE:CMP), based in Overland Park, Kansas, is an essential minerals company that produces minerals including salt, magnesium chloride, sulfate of potash, and other plant nutrients primarily for distribution in North America. It operates 12 production sites throughout U.S., Canada, and U.K.
Compass Minerals International, Inc. (NYSE:CMP) is pursuing the development of a lithium brine project at its existing resource in Utah. The company plans to produce battery grade lithium carbonate from the brine which it already uses to produce potash, salt, and magnesium chloride. The lithium project is expected to produce 11,000 tons of lithium carbonate in its first phase expected to commence production in 2025.
On May 9, Compass Minerals International, Inc. (NYSE:CMP) released its financial results for Q1 2023. It generated a revenue of $411 million and a net loss of $22 million for the quarter. The company also declared a regular quarterly cash dividend of $0.15 per share.
Similar to Compass Minerals International, Inc. (NYSE:CMP), several other major potash players such as The Mosaic Company (NYSE:MOS), Nutrien Ltd. (NYSE:NTR), and Archer Daniels Midland Company (NYSE:ADM) have made it to our list of 10 best potash stocks to buy.
8. ICL Group Ltd. (NYSE:ICL)
Number of Hedge Fund Holders: 16
Based in Tel Aviv, Israel, ICL Group Ltd. (NYSE:ICL) is a leading global specialty minerals company utilizing its bromine, potash, and phosphate resources to provide solutions for agriculture, energy, industrial, and health & personal care customers. Founded in 1929, the company employs over 12,000 people worldwide and its products are sold to over 100 countries globally.
ICL Group Ltd. (NYSE:ICL) benefits from an extensive network comprising 38 production sites in 13 countries, 23 R&D centers, and 64 sales and distribution sites in over 30 countries. The company produced nearly 4.7 million tons of potash in 2022.
ICL Group Ltd. (NYSE:ICL) has a strong dividend yield with the latest quarterly dividend payment announced in May that amounted to $0.1132 per share. The dividend payout represents a dividend yield of nearly 9% based on the share price on July 3.
As of March 31, ICL Group Ltd. (NYSE:ICL) shares were owned by 16 hedge fund holders with a total value of $90 million.
7. The Andersons, Inc. (NASDAQ:ANDE)
Number of Hedge Fund Holders: 18
Maumee, Ohio-based The Andersons, Inc. (NASDAQ:ANDE) is a diversified agricultural services company with operations across the commodity merchandising, renewables, and nutrient and industrial sectors. The nutrient business of the company is a leading manufacturer, distributor and retailer of agricultural and related plant nutrients and related products which includes potash-based fertilizers.
On May 2, The Andersons, Inc. (NASDAQ:ANDE) released its financial results for Q1 2023. It generated a revenue of $3.9 billion and a net loss of $44 million. The normalized EPS for the quarter, at $0.20, exceeded the consensus estimates by $0.02.
On June 21, Roth MKM initiated coverage of The Andersons, Inc. (NASDAQ:ANDE) shares with a ‘Buy’ rating and a price target of $55.0 for the shares. This represents a potential upside of 20.6% to the closing share price of the stock on July 6.
The Andersons, Inc. (NASDAQ:ANDE) has paid regular quarterly cash dividends since its listing on the NASDAQ in 1996. The company currently pays a quarterly dividend of $0.185 per share which translates to a dividend yield of 1.62% based on the share price on July 6.
6. Sociedad Quimica y Minera (NYSE:SQM)
Number of Hedge Fund Holders: 20
Santiago, Chile-based Sociedad Quimica y Minera (NYSE:SQM) is a global mining company operating in Chile with leading positions across five business lines: Specialty Plant Nutrition; Iodine and Derivatives; Lithium and Derivatives; Potassium and Solar Salts.
Sociedad Quimica y Minera (NYSE:SQM) leverages its caliche ore deposits to produce a wide range of nitrate-based products for agricultural uses, including potassium nitrate, sodium nitrate, sodium potassium nitrate, potassium sulphate and potassium chloride fertilizers. The company sold nearly 89 thousand metric tons of potassium nitrate and sodium potassium nitrate fertilizers as well as 138 thousand metric tons of potassium chloride and potassium sulphate in Q1 2023.
As of Q1 2023, Sociedad Quimica y Minera (NYSE:SQM) shares were held by 20 of the 943 hedge funds tracked by Insider Monkey with a total value of $311 million. Ken Griffin’s Citadel Investment Group was the largest hedge fund shareholder with ownership of 1.5 million shares valued at $125 million.
Similar to Sociedad Quimica y Minera (NYSE:SQM), several other major potash players such as The Mosaic Company (NYSE:MOS), Nutrien Ltd. (NYSE:NTR), and Archer Daniels Midland Company (NYSE:ADM) have made it to our list of 10 best potash stocks to buy.
5. BHP Group (NYSE:BHP)
Number of Hedge Fund Holders: 24
Based in Melbourne, Australian, BHP Group (NYSE:BHP) is a leading mining company with operations across copper, metallurgical coal, nickel, iron ore, and potash. The company produced 253 million tons of iron ore, 1.6 million tons of copper, 42.8 million tons of coal, and 77 thousand tons of nickel in FY 2022.
BHP Group (NYSE:BHP) has invested in a potash mining project located nearly 140 km east of Saskatoon, Canada. The Jansen Stage 1 project, with $5.7 billion investment by BHP Group (NYSE:BHP), is expected to commence production by the end of 2026 with a production capacity of 4.35 million tons of potash per year.
According to the Insider Monkey data on 943 leading hedge funds, 24 hedge funds were long BHP Group (NYSE:BHP) shares as of Q1 2023. Ken Fisher’s Fisher Asset Management was the largest hedge fund shareholder with ownership of 18.1 million shares valued at $1.1 billion.
4. Nutrien Ltd. (NYSE:NTR)
Number of Hedge Fund Holders: 32
Saskatoon, Canada-based Nutrien Ltd. (NYSE:NTR) is the largest producer of potash by capacity and one of the largest producers of nitrogen and phosphate globally. With a history that goes back nearly 50 years, the company has nearly 25,000 employees and produces and distributes nearly 27 million tons of potash, nitrogen, and phosphate products.
Nutrien Ltd. (NYSE:NTR) was formed through the merger of Agrium Inc. and Potash Corporation of Saskatchewan Inc., completed in January 2018. The company has total operational capacity to produce 20.6 million tons of potash, 7.1 million tons of nitrogen-based products, and 1.7 million tons of phosphate.
Nutrien Ltd. (NYSE:NTR) has increased regular cash dividend payouts on its common stock since the merger in 2018. The dividends have grown at a CAGR of 5.8% since that time and the company currently pays a quarterly cash dividend of $0.53 per common share.
As of Q1 2023, Nutrien Ltd. (NYSE:NTR) shares were held by 32 prominent hedge funds with the total shares held by these hedge funds valued at $350 million. Notable hedge fund shareholders included First Eagle Investment Management, Renaissance Technologies, and D E Shaw, among others.
3. FMC Corporation (NYSE:FMC)
Number of Hedge Fund Holders: 32
Philadelphia, Pennsylvania-based FMC Corporation (NYSE:FMC) is a global agricultural sciences company providing products and solutions across biologicals, crop nutrition, digital and precision agriculture. It employs nearly 6,600 personnel at more than 100 sites worldwide.
On May 1, FMC Corporation (NYSE:FMC) released its financial results for Q1 2023. It generated a revenue of $1.34 billion and a net income of $196 million which translates to a normalized EPS of $1.77. The company currently pays a regular quarterly dividend of $0.58 per share.
Following the earnings release, Wells Fargo lowered the price target on FMC Corporation (NYSE:FMC) shares to $142 from $148 and maintained an ‘Overweight’ rating for the shares. This represents a potential upside of nearly 37.4%, based on the share price as of July 6.
FMC Corporation (NYSE:FMC) was a common component of the portfolios of 32 hedge funds out of the 943 tracked by Insider Monkey. Notable investors included Glenview Capital, Cardinal Capital, and Citadel Investment Group, among others.
2. Archer Daniels Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 39
Founded in 1902, Archer Daniels Midland Company (NYSE:ADM), commonly known as ADM, is a major player in the food industry, with a diverse portfolio of products including oils, sweeteners, starches, proteins, and feed ingredients. The company engages in every aspect of the food and feed production process, from sourcing and processing raw materials to delivering finished products to customers. ADM is also involved in global commodity trading of crops like corn, soybeans, and wheat.
On April 25, Archer Daniels Midland Company (NYSE:ADM) released its financial results for Q1 2023. Its revenue increased by 2% y-o-y to $24.1 billion while net income surged by 11% y-o-y to $1.1 billion. Earlier in January, the company announced a 12.5% increase in its quarterly dividend to $0.45 per share.
On June 21, Roth MKM analyst Brian Wright initiated coverage of Archer Daniels Midland Company (NYSE:ADM) with a price target of $92 and a ‘Buy’ rating for the shares.
As of Q1 2023, Archer Daniels Midland Company (NYSE:ADM) shares were held by 39 hedge funds with a total value of $751 million. Cliff Asness’ AQR Capital Management was its largest hedge fund shareholder with ownership of 1.9 million shares valued at $153 million.
1. The Mosaic Company (NYSE:MOS)
Number of Hedge Fund Holders: 40
Tampa, Florida-based The Mosaic Company (NYSE:MOS) is a global leader in the crop nutrient industry, producing and delivering phosphate and potash-based nutrients on a massive scale. The company engages in every step of the production process, from mining to production.
The Mosaic Company (NYSE:MOS) operates through production facilities across 9 countries, serving customers in more than 40 countries worldwide. The company employs more than 13,000 personnel globally and has annual production capacity of 25 million tons of finished concentrated phosphate and potash. It sold 1.6 million finished product tons of potash during April-May period which generated revenues of $672 million.
On June 8, BofA analyst Steve Byrne lowered the price target on The Mosaic Company (NYSE:MOS) shares to $50 from $60 but maintained a ‘Buy’ rating for the shares.
As of Q1 2023, The Mosaic Company (NYSE:MOS) was the best potash stock to buy based on hedge fund sentiment as 40 of them held its shares with a total value of $463 million. Cliff Asness’ AQR Capital Management was the largest hedge fund shareholder with ownership of 3.7 million shares valued at $165 million.
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Disclosure: None. 10 Best Potash Stocks to Buy is originally published on Insider Monkey.
