Improved weather and soil conditions led to a 12.6% jump in revenue for this company during the most-recent quarter.
A recent soybean-related acquisition continues to diversify the firm’s geographical reach and product offerings.
NUTRIEN LTD., (Toronto symbol NTR; www.nutrien.com) took its current form on January 1, 2018, when Agrium Inc. (old symbol AGU) merged with rival fertilizer producer Potash Corp. of Saskatchewan (old symbol POT).
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The merger had one major goal—to let it better compete with larger fertilizer producers in Belarus and Russia. Potash prices had been under pressure since 2013, when Russian producer Urlkali JSC pulled out of its sales partnership with Belarusian Potash Co. Slowing demand from emerging markets amid the resulting flood of supply prompted Potash Corp. and Agrium to launch merger discussions.
First and foremost, the merger let the combined company radically cut costs. That continues to give it a big cushion against traditionally volatile and cyclical fertilizer prices.
What’s more, it let Potash Corp., the world’s largest fertilizer producer by capacity, link up with Agrium’s more stable retail network. Agrium’s retail arm was North America’s biggest for fertilizer, seeds and equipment.
For Potash, access to Agrium’s network let it lower its distribution and marketing costs, while at the same time giving it a wider outlet for fertilizer sales. That’s a big advantage over its pure-play competitors. For Agrium, the deal gave it a steadier supply of low-cost fertilizers.
Potash Corp. shareholders received 0.40 shares in Nutrien for each POT share they held; Agrium investors received 2.23 shares for each AGU share.
Mining Stocks: Retail operations and improving weather should boost revenue
Starting with the October 2019 payment, the company increased your quarterly dividend by 5.7%. Investors now receive $0.45 U.S. a share instead of $0.43 U.S. The new annual rate of $1.80 U.S. yields 5.7%.
The company lost $69 million, or $0.12 a share, in the three months ended March 31, 2020 (all amounts except share price in U.S. dollars). That was mainly due to lower prices for potash, nitrogen and phosphate fertilizers. A year earlier, Nutrien earned $118 million, or $0.20 a share.
However, revenue in the quarter gained 12.6%, to $4.19 billion from $3.72 billion. Improving weather and soil conditions have spurred farmers in the U.S. and Australia to buy more seeds and fertilizers through Nutrien’s retail outlets.
The company continues to expand its retail operations. It recently agreed to buy Tec Agro Group, which produces soybean seeds for farmers and operates eight retail stores in Brazil. That will increase the company’s retail presence in that country to 25 stores.
Nutrien has yet to reveal what it’s paying for Tec Agro. Still, the new operations will add $200 million to its annual revenue.
The company’s strong balance sheet will continue to let it expand. As of March 31, 2020, it held cash of $3.12 billion, and its long-term debt of $8.54 billion is a manageable 33% of its market cap.
The company’s TSI Dividend Sustainability Rating is Average.
As a long term holder of CAE and disappointed with their lack of performance, not to mention zero yield, I am left wondering if Nutrien would be a better choice for my TFSA account. I have been a long term holder of this stock as well but have trimmed it to a small position.
The decision about whether to sell your shares of CAE….and buy Nutrien, is a personal one… However, we do like both stocks, and see both as buys. When investors sell stocks, they should also take into account their overall portfolio balance across most, if not all, of the five sectors. As well, typically, we advise that a stock shouldn’t make up more than, say, 5% of a portfolio. (However, it could make up as much as 10% if the value rises and it’s not a risky or speculative stock.) So you could also take partial profits in stocks that make up a disproportionately high part of your portfolio. Meanwhile, Pat McKeough says that there are a number of difficulties with recommending a model portfolio—or specific stock picks—for all investors. The main one is that each individual has different objectives, acceptable risk levels and so on. For example, conservative or income-seeking investors may want to emphasize utilities and banks for their high and generally secure dividends. More aggressive investors might want to increase their portfolio weightings in resources or manufacturing stocks.
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As a long term holder of CAE and disappointed with their lack of performance, not to mention zero yield, I am left wondering if Nutrien would be a better choice for my TFSA account. I have been a long term holder of this stock as well but have trimmed it to a small position.
The decision about whether to sell your shares of CAE….and buy Nutrien, is a personal one… However, we do like both stocks, and see both as buys. When investors sell stocks, they should also take into account their overall portfolio balance across most, if not all, of the five sectors. As well, typically, we advise that a stock shouldn’t make up more than, say, 5% of a portfolio. (However, it could make up as much as 10% if the value rises and it’s not a risky or speculative stock.) So you could also take partial profits in stocks that make up a disproportionately high part of your portfolio. Meanwhile, Pat McKeough says that there are a number of difficulties with recommending a model portfolio—or specific stock picks—for all investors. The main one is that each individual has different objectives, acceptable risk levels and so on. For example, conservative or income-seeking investors may want to emphasize utilities and banks for their high and generally secure dividends. More aggressive investors might want to increase their portfolio weightings in resources or manufacturing stocks.