1 Top-Notch Commodities Play to Consider Today

Here’s why Nutrien Ltd. (TSX:NTR)(NYSE:NTR) remains a top-notch commodity pick I’d invite long-term investors to consider today.

| More on:
sad concerned deep in thought

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

With stock markets sitting at record levels, finding pockets of growth-at-a-reasonable-price today is difficult. However, certain commodities plays provide nice upside.

Indeed, as a key global player in the fertilizer market, Nutrien Ltd. (TSX:NTR)(NYSE:NTR) is a great way to play the commodities boom. With excellent recent returns, Nutrien has proven its worth among investors seeking defensiveness. This stock also happens to be a great way to add diversification to one’s portfolio.

For those as bullish on commodities as I am, here’s why this company is on my radar right now.

Much better earnings spur positive outlook

With the incorporation of new technologies and rising fertilizer prices, Saskatoon-based Nutrien sees itself positioned favorably in the current market.

In the company’s recent earnings call, Nutrien increased its dividend and launched a new share buyback program. The company cited healthy operational growth as a key driving factor behind these decisions. This marks Nutrien’s third dividend raise in three years, and this company plans to buy back at least 5% of its shares in the coming year.

Financial data firm Refinitiv expected Nutrien’s earnings to come in at US$81 million, or US$0.15 per share. However, Nutrien posted blow-away earnings of US$316 million or US$0.55 per share. It posted a loss of US$48 million or US$0.08 in the same period last year. Additionally, Nutrien saw EBITDA balloon year over year, as increased agricultural demand has bolstered Nutrien’s bottom line.

Supply shortages related to unexpected cold weather in the U.S. has resulted in several nitrogen fertilizer firms being shut down, which could further drive up commodity prices, benefiting Nutrien shareholders in the near term.

It’s ready for a new direction with a new CEO

Nutrien CEO Chuck Magro recently stepped down from his CEO role. Reports indicate that Nutrien has appointed Chairman Mayo Schmidt as the new CEO. Unlike other corporate step-downs, this one appears to be friendly in nature. However, investors seem to be a little spooked by the news, with Nutrien shares trading down since the news two days ago.

That said, for long-term investors who believe in Nutrien’s business model, this may be a great buying opportunity.

After all, the company’s new CEO is one many think could take this company in an even better direction. Mr. Schmidt brings over his 30-year experience in the agricultural business and is a remarkable leader in this industry. His goals align well with company objectives. The board is confident that the company will build further on this year’s strong earnings and create shareholder value.

Schmidt is one of the best persons to take over this role as he firmly believes in Nutrien’s business outlook. He can firmly implement this firm’s business strategies and make this company an industry leader in various segments.

Accordingly, I remain bullish on Nutrien, and look at this recent dip as a buying opportunity today.

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.

More on Dividend Stocks

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

1 U.S. Stock to Buy That Could Make You a Millionaire

Even though tech stocks are usually the go-to growth picks in the US stock markets, there are quite a few…

Read more »

Increasing yield
Dividend Stocks

My 3 Favourite TSX Dividend Stocks Right Now

These dividend stocks have been a favourite for a while, but even more so now that they trade at such…

Read more »

funds, money, nest egg
Dividend Stocks

New Investors: The 2 Best Options To Earn Regular Passive Income!

You can earn high passive income with dividend stocks like the Toronto-Dominion Bank (TSX:TD)(NYSE:TD).

Read more »

Dividend Stocks

This Canadian 6%-Yielder’s On Sale, But Not for Long!

SmartCentres REIT (TSX:SRU.UN) is a wonderful high-yielding REIT that has a higher yield and lower valuation than most its peers.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

This 1 Canadian Dividend Stock Could Help You Earn Over $100 Per Week in Passive Income

This dividend stock won’t disappoint you if you want to earn reliable passive income in Canada -- equivalent to more…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

TFSA Passive Income: 2 Monthly Dividend Stocks for Canadian Retirees to Buy Now

Retirees seeking tax-free monthly dividends can now buy high-yield stocks at cheap prices for a TFSA focused on passive income.

Read more »

financial freedom sign
Dividend Stocks

3 Selloff Stocks That Could Help Set You Up for Life

Here are three selloff stocks to buy for those who believe that these companies can growth through a rising interest…

Read more »

money cash dividends
Dividend Stocks

Passive Income: Get Over $430 in Dividend Income Every Month

These two top dividend stocks could provide substantial monthly cash flows to supplement your active income.

Read more »