Opinions
Christine Poole
Nutrien Ltd.
NTR-T
TOP PICK
Sep 11, 2018
Stock price when the opinion was issued
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Bumpy. Q2 is a crucial selling season for them, and supply/demand dynamics in potash will be key. Reintroduced it to portfolios in January this year. Fertilizer cycle has bottomed and is slowly turning up. Vertically integrated with downstream farm supply stores. Operational improvement in South America to improve margins.
Trading at half of peak value of 3 years ago. Lots of upside.
Likes it, as well as its US counterpart MOS. Part of his bias toward commodities. Downtrend ended, rounded bottom, now forming a neckline. Trying to break out; hasn't yet, but chart and fundamentals are set up to do so. Could get quite a bit higher, but you have to be patient (it's a commodity, and there's a cycle at work).
World's largest crop nutrient business. Upstream production vertically integrated with downstream stores (in US, Canada, and some in South America). Commodity prices for the 3 fertilizer ingredients has bottomed, supported by steadily improving prices for major cash crops (corn, wheat, soybeans).
Trades roughly at long-term average multiple. Earnings on cusp of a turning point. Dividend's increased 36% since merger in 2018, plus reduced outstanding shares by 23% since then. Yield 3.6%.
Lots of geopolitical things happening. When stock shot up from Russian invasion, sold some but still retains a 1/2-2/3 position. Likes it long term. BHP is bringing on Jansen, but it's behind (and second phase may be mothballed). Good diversifier. Nice yield.
For new clients, buying a half position. Ideally, want to buy under $70.
Choppy stock, pretty volatile. But you can see the nice uptrend on the chart, which helps you digest the highs and lows. After a big downtrend, you had basing, and then a nascent uptrend -- stock's looking through bad news, just be patient. Can still buy today and do well.
She thinks synergies from the merger of Potash and Agrium are coming through faster than expected. They had to sell several assets as a condition of the merger, and those sales are now closing, generating about $5 billion in cash. They also expect to generate $6 to 8 billion in free cash flow over the next few years. They are buying back stock and they expect to increase the yield on their dividend. They are also investing in growing out their retail platform, hold about a 19% share of their market in the US and think they can grow it to 30%. They are also planning to expand in Australia and Brazil. They think their retail business is the promising area for future growth, rather than wholesale. In addition, the price of potash seems to be rising from its trough. Yield 2.9%. (Analysts’ price target is $81.48)