5 stocks for the agricultural bull market 2022
(1:00) – Will agricultural stocks be a solid investment tool for 2022?
(5:40) – Tracey’s Top Stock Picks
(24:00) – Summary of episodes: CF, MOS, IPI, NTR, ANDE
Welcome to Episode 259 of the Value Investor podcast.
Each week, Tracey Ryniec, editor of the Zacks Value Investor portfolio, shares some of her top investment advice and stock picking.
2021 has been a good year for value investors as some of the hottest industries this year fall into the “value” category including energy, banking and agriculture.
Tracey expects these industries to be still hot in 2022.
The Street has “found” energy stocks this year because it receives media coverage. But agriculture is not covered at all despite a huge expected increase in income.
Agricultural stocks can be in the food sector, in equipment manufacturers, in fertilizers or in the food industry.
Fertilizer and agribusiness companies, such as CF Industries, Mosaic, Intrepid Potash, Nutrien, and The Andersons, have excellent Zacks ranks and are consistently cheap.
Why are they expected to be in a bull in 2022?
5 stocks for the agricultural bull market 2022
1. CF Industries CF
CF Industries is the world’s largest producer of ammonia. With soaring nitrogen fertilizer prices, so are CF Industries’ profits.
In 2021, CF Industries is expected to earn $ 3.25. But CF Industries’ Zacks consensus estimate for 2022 jumped to $ 9.70, a gain of 198.3%.
Stocks have also skyrocketed this year, jumping 71%. But the valuation of CF Industries remains attractive, with a forward P / E of 20.
CF Industries is also shareholder friendly, with a current dividend of 1.8%.
Fertilizer prices remain high through 2022.
Look for buying opportunities in the event of a downturn.
2. Mosaic MOS company
Mosaic is one of the largest fertilizer companies in the world, specializing in potash and phosphates.
Mosaic is bullish by 2022.
In a Nov. 11 update on sales volumes for October 2021, Mosaic said beyond Q4 demand for nutrients is strong, having already committed and priced at 40% of sales volumes. expected from the phosphate segment for the first quarter of 2022.
So it’s no surprise that Mosaic’s earnings estimates are on the rise. He is expected to earn $ 5.10 in 2021, but Zacks’ consensus estimate for 2022 is $ 7.54, up 47.8% year-over-year.
However, over the past month, Mosaic shares have fallen 11.3%.
Mosaic is the cheapest fertilizer stock, with a forward P / E of 7.3.
Is Mosaic a buying opportunity right now?
3. Intrepid Potash IPI
Intrepid Potash produces potassium, magnesium, sulfur, salt and water for agriculture, animal feed, and the oil and gas industries.
It is a small cap company with a market cap of $ 575.9 million.
Although Intrepid Potash has a farming business, it is the only company of the five that also operates in the hot oil and gas industry.
Intrepid Potash recorded significant free cash flow in the third quarter, although it was historically the slowest free cash flow quarter. Intrepid Potash currently has $ 26 million in cash.
Shares have climbed 78% since the start of the year but are still attractively priced. Intrepid Potash has a forward P / E of 19.3 and earnings are expected to drop from $ 2.20 this year to $ 5.23 in 2022.
Investors looking for a small cap farm should keep Intrepid Potash on their shortlist.
4. Nutrien RNT
Nutrien is one of the largest fertilizer and agribusiness companies in the world with a market capitalization of $ 38 billion.
It produces the three major fertilizers and also operates a retail business, Nutrien Ag Solutions, which reported double-digit revenue growth in the third quarter of 2021.
Nutrien recently announced a record third quarter profit.
In the first three quarters of the year, Nutrien also posted record free cash flow of $ 2.8 billion.
Over the next 6 months, Nutrien plans to reduce its long-term debt by $ 2 billion and is repurchasing shares as well.
Nutrien is expected to earn $ 5.62 in 2021, but the Zacks 2022 consensus estimate is expected to rise another 35% to $ 7.61.
Because profits continue to rise, Nutrien has a forward P / E of just 12.
Tracey owns shares of Nutrien in her own personal portfolio and in the Zacks Value Investor portfolio.
Nutrien shares have fallen 4.9% in the past month.
Is this a buying opportunity?
5. The Andersons ANDE
The Andersons is an Ohio-based agri-food company that operates in three segments: commerce, ethanol, and plant nutrients.
In the third quarter, Trade, which owns and operates 70 grain terminals in the United States and Canada that stock corn, soybeans, wheat and other commodities, posted record profits.
The Andersons also have strong free cash flow and reduced their long-term debt by $ 300 million this year.
But The Andersons also pays a dividend, currently earning 1.9%.
Shares of The Andersons have climbed 50% year-to-date, but have fallen from recent highs.
The Andersons are still cheap, with a forward P / E of just 13.3.
Value-oriented investors looking for a small-cap company on the agribusiness side should keep The Andersons on their shortlist.
Tune in to this week’s podcast
What else do you need to know about buying cheap farm stocks for 2022?
Tune in to this week’s podcast to find out.
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The Andersons, Inc. (ANDE): Free Stock Analysis Report
CF Industries Holdings, Inc. (CF): Free Stock Analysis Report
The Mosaic Company (MOS): Free Stock Analysis Report
Intrepid Potash, Inc (IPI): Free Stock Analysis Report
Nutrien Ltd. (NTR): Free Stock Analysis Report
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