Warren Buffett could be the most iconic value investor of all time. Investors often look to Warren Buffett’s portfolio for guidance on where to look for value.
The Oracle of Omaha has ventured into Canada on multiple occasions in the past. Indeed, the Canadian market is filled with great value opportunities. It’s conceivable we could see more TSX-listed portfolio additions from Buffett on the horizon.
Competitive advantage key to long-term growth
In a recent article, I’d pointed out why I thought Nutrien’s retail assets provided a nice moat for investors. Indeed, the company’s retail segment has accounted for more than one-quarter of Nutrien’s sales for some time. I’d highly recommend readers check out that article for more information on this front. However, I’m going to discuss another key factor I think investors considering the size of Nutrien’s moat ought to ponder.
Nutrien is a leader in digital agriculture. Just what is digital agriculture, you might ask?
Well, Nutrien provides a platform to farmers to help them manage when and how to plant, how much to fertilize, and when to harvest. Nutrien is now competing with some of the biggest companies in digital agriculture in the world and is building an impressive portfolio of high-margin business while adding value to its clientele. It’s a win-win for Nutrien and its customers and is a portfolio of business that has great growth potential.
Long-term fundamentals strong
Investors should ask themselves: Will the world need more food or less in 10 years from now? 20 years? 50 years?
The core business of Nutrien is in helping farmers achieve higher yields via providing fertilizers and nutrients. This business will not slow down any time soon. Nutrien’s market share in Asia continues to grow. Additionally, this company’s position as one of the largest global players in fertilizer production builds on Nutrien’s durable competitive advantage further. We’ve seen this sector consolidate substantially in recent years. Accordingly, Nutrien’s position is enviable right now, and I think could be improved further if additional consolidation takes place.
Nutrien has some of the best fundamentals of its peers, and a growth profile via its digital agriculture portfolio of business I find really intriguing. This is an exciting company in a boring industry, with great long-term fundamentals supporting a multi-decade long runway for growth. If that’s not exciting enough for investors like Warren Buffett, I don’t know what is.
Like Nutrien's unique growth profile? Here are 10 other companies with similar moats I think investors should consider:
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Nutrien Ltd.