Opinions
Christine Poole
Nutrien Ltd.
NTR-T
TOP PICK
Sep 11, 2018
Stock price when the opinion was issued
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Brand-new position for him. Seems to be breaking out of resistance after basing. Former peaks are resistance targets. Likes it as part of his commodity complex. Bought his first 2% because of the breakout. If it breaks down from resistance, he'll take one leg out. If it fails long-term support, he'll get totally out. Yield is 3.68%.
(Analysts’ price target is $86.54)Added to his portfolio in January. Has a long way to climb back, though not necessarily to the peaks of 2022. Prices of its component commodities are rising, amidst the backdrop of slowly improving prices for major agricultural cash crops. Margins are improving in South America.
Likes the chart, turned a corner last summer. Lots of upside. Discounted valuation. Prolifically buying back shares. Yield is ~3.7-3.8%, above its long-run average.
Seeking new West Coast terminal to export more potash. Prices are just starting to trend a bit higher, which means demand is starting to pick up and supply is going down. Long term, warmer temperatures will mean growing seasons will be more difficult, so fertilizer demand should continue to rise. Yield is 3%.
Understand that commodity prices are always volatile in the short term. Up 27% YTD, 15% over 5 years, but 10 years has been 6%, 15 years has been 10%. So total return over time should be 5-10%. He doesn't offer price targets.
Definitely putting in a major low. Highlighting this quite frequently to clients over the last couple of months. His fundamental analyst is highlighting this as well. Broke the bigger multi-year downtrend from 2022. Lots of institutional buying. Its peer in the States, MOS, is showing the same pattern.
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.
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)