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Sun Shines on Agricultural Firms in 2nd Quarter

Potash producers Nutrien and Mosaic look cheap today, while Compass Minerals and SQM are both trading in 4-star territory.

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After unfavorable weather weighed on first-quarter results for many of the agriculture companies we cover, volumes rebounded for nearly all companies in the second quarter.

Potash producers are the most undervalued group in our agricultural coverage. This is largely due to our higher near-term potash price forecast and our outlook that both Nutrien and Mosaic will be able to reduce potash unit production costs, which should boost profits. Nutrien and Mosaic are both trading at a more than 10% discount to our fair value estimate.

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