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With seven billion people inhabiting the Earth, there's no doubt that the demand for food will stay strong for as long as there are people. And as far as I know, people will be around for quite some time. So how can we benefit from this long-lasting demand for food? One of my favorite ways to benefit from this necessity is through investing in agricultural chemical (fertilizer) companies. Food is crucial to people; crops are crucial to food; and fertilizers are crucial to crops. Therefore fertilizer must be crucial to people, according to the transitive property. Sure, fertilizer might not seem like a glamorous investment, but a very profitable one nonetheless. So here are three top tier agricultural chemical stocks to consider adding to your portfolio.

The Mosaic Company (MOS)

  • Market Cap: $21.15 billion
  • Current Share Price: $49.70
  • 52 Week Range: $44.43-$74.31
  • P/E: 10.59
  • PEG: N/A
  • Operating Margin: 24.16%
  • Profit Margin: 18.59%
  • Return On Equity: 18.12%
  • Total Cash: $3.20 billion
  • Total Debt: $1.09 billion
  • Dividend (%): $0.50 (1.00%)
  • Dividend Payout Ratio: 4.00%

(Find more stats here.)

Potash Corp. of Saskatchewan, Inc. (POT)

  • Market Cap: $33.15 billion
  • Current Share Price: $38.60
  • 52 Week Range: $36.73-$62.60
  • P/E: 11.95
  • PEG: 1.08
  • Operating Margin: 46.35%
  • Profit Margin: 36.38%
  • Return On Equity: 36.55%
  • Total Cash: $417.00 million
  • Total Debt: $4.71 billion
  • Dividend (%): $0.56 (1.50%)
  • Dividend Payout Ratio: 9.00%

(Find more stats here.)

CF Industries Holdings, Inc. (CF)

  • Market Cap: $10.84 billion
  • Current Share Price: $165.11
  • 52 Week Range: $115.34-$203.32
  • P/E: 6.97
  • PEG: 0.68
  • Operating Margin: 45.38%
  • Profit Margin: 25.20%
  • Return On Equity: 36.64%
  • Total Cash: $1.71 billion
  • Total Debt: $1.62 billion
  • Dividend (%): $1.60 (1.00%)
  • Dividend Payout Ratio: 6.00%

(Find more stats here.)

By the numbers, these companies seem like pretty good deals right now. They all sport healthy balance sheets, fat margins, and even pay modest dividends with extremely low payout ratios. But in order to produce their fertilizer products, these companies rely on commodities such as natural gas, which can potentially affect margins when commodity prices increase. In the past three months MOS, POT, and CF have been beaten up 14%, 16% and 10%, respectively, so a potential decrease in margins could already be priced into these stocks.

Bull market or bear market, it doesn't matter; people will need food regardless of the economic climate. Capitalize on this advantage by doing a little more research on these three top dog fertilizer companies and decide on which you believe will outperform the rest.

Source: 3 Fertilizer Stocks To Plant In Your Portfolio