An Insider Bought Shares of Mosaic Co (MOS). Should You Follow?

Potash Corp./Saskatchewan (USA) (NYSE:POT) and CF Industries Holdings, Inc. (NYSE:CF) are two other fertilizer manufacturers. Potash Corp. is valued at 12 times consensus earnings for 2014, though it has recently been doing considerably worse than Mosaic: in the fourth quarter of 2012, its revenue and net income decreased at double-digit rates versus a year earlier. As a result we wouldn’t be buying, particularly relative to the company’s peers. CF has also been a not particularly strong performer, with sales falling, but that stock trades at a significant discount to both Mosaic Co (NYSE:MOS) and Potash Corp./Saskatchewan (USA) (NYSE:POT) with trailing and forward P/Es of 7 and 8, respectively. So even if earnings decline a bit- as they are expected to over the next couple years- CF Industries Holdings, Inc. (NYSE:CF) could still prove a good value as long as it is then able to stabilize its business.

We can also compare Mosaic to wholesaler and retailer of agricultural products Agrium Inc. (USA) (NYSE:AGU) and to agricultural technology company Monsanto Company (NYSE:MON). Agrium Inc. (USA) (NYSE:AGU) is currently in the middle of an activist campaign by JANA Partners to split the wholesale and retail businesses from each other against the judgment of management. The stock’s earnings multiples are low, but revenue was up only slightly in its most recent quarter compared to the same period in the previous year. Monsanto has been reporting high growth on both top and bottom lines; however, the market is already pricing in expectations of continued growth and in fact the forward P/E is 20.

The strength of Monsanto Company (NYSE:MON)’s business is encouraging but it might be best to keep the company on a watch list to see if it can outperform analyst expectations in the next couple quarters (as it may have to do to justify the current valuation). Mosaic Co (NYSE:MOS) looks interesting, and we have this insider purchase to consider, but we think that CF’s cheaper stock would make that our first target for further research if we were looking for a good value tied to agriculture.

Disclosure: I own no shares of any stocks mentioned in this article.