Nutrien (NTR) shares have rallied at 35% since the start of the year: what motivates the action?
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Nutrien Ltd.NTR shares have gained 34.8% so far this year, beating the industry’s 24.9% gain. The company also topped the S&P 500’s 18.5% rise in the same period.
Let’s take a look at the factors behind the price appreciation of this Zacks Rank # 1 (Strong Buy) stock.
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What favors the stock?
Nutrien benefits from higher prices and healthy demand for crop nutrients. It is also benefiting from acquisitions, profitability and increased adoption of its digital platform. The optimistic outlook for 2021 also helped the company’s stock rally.
The company is experiencing strong demand and higher prices for fertilizers, particularly potash, supported by strong global agricultural markets. It is expected to benefit from strong potash sales volumes this year thanks to strong domestic and foreign demand.
Nutrien is also benefiting from higher net realized selling prices for crop nutrients, as seen in the second quarter. Potash prices strengthened on the strength of global demand, helped by strong producers’ economies, higher crop prices and low global inventory levels. Limited availability and firm demand are also pushing up phosphate prices globally. Declining global supply availability resulting from lower exploitation rates and soaring energy prices is also likely to increase nitrogen prices. Higher prices are expected to boost the company’s sales and margins in 2021.
The company is also taking steps to boost potash production following tighter global potash market conditions. This decision responds to strong market fundamentals and aims to provide its customers with the agricultural inputs they need to feed a growing population. The company plans to produce an additional one million tonnes of potash in 2021 as a result of the decision.
Nutrien, in August, increased its adjusted net earnings per share and forecast Adjusted EBITDA to $ 4.60 – $ 5.10 (from $ 2.55 – $ 3.25) and 6 – $ 6.4 billion (vs. $ 4.4 – $ 4.9 billion), respectively, for the full year 2021. The revision reflects higher expected results across all of its businesses and the benefits of an increase of a million tonnes of its 2021 potash sales forecast.
Nutrien’s profit estimates have also risen in the past two months. Zacks’ consensus estimate for 2021 has increased by 25%. The consensus estimate for the third quarter of 2021 has also been revised upwards by 38.9% over the same period.
Other actions to consider
Some other top-ranked actions worth considering in the basic materials space include The Mosaic Company MOS, United States Steel Company X, and AdvanSix Inc. ASIX, each sporting a Zacks Rank # 1. You can see The full list of today’s Zacks # 1 Rank stocks here.
Mosaic has an expected profit growth rate of 471.8% for the current year. The stock has rebounded about 94% year on year.
US Steel has a projected profit growth rate of 382.9% for the current year. The company’s shares have climbed about 188% in a year.
AdvanSix has a projected profit growth rate of 160.4% for the current year. The company’s shares have jumped about 209% in a year.
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