RRSP Wealth: 1 Top Canadian Stock to Buy in August

This top Canadian commodity stock is a global leader that looks undervalued right now. Here’s why it deserves to be on your RRSP buy list.

| More on:

RRSP investors face an expensive market right now, but there are still good buy-and-hold stocks selling at cheap prices to put inside a self-directed retirement fund. Let’s take a look at Nutrien (TSX:NTR)(NYSE:NTR) to see why it might be among the best RRSP stocks to buy today.

Nutrien’s operations

Nutrien is a global leader in the supply of crop nutrients used by farmers to improve yields from their fields. The Canadian fertilizer giant is the world’s largest producer of potash and is a major player in the nitrogen and phosphate markets.

Nutrien also has a retail division that was formerly part of Agrium before the company merged with PotashCorp to create the new firm. The retail business sells seed and crop protection products to roughly 500,000 farmers around the world. In recent years the company has invested in new digital solutions that it now markets to retail clients to help them turn their businesses more efficiently.

Opportunity

Commodities run in cycles, so you want to buy a stock like Nutrien in the early stages of an upward trend. That seems to be the case today. Fertilizer prices have turned the corner after a multi-year slump and appear to be at the beginning of what could be an extended recovery.

Global crop prices surged last year and remain high on strong demand. As a result, farmers are planting more acreage and ordering more crop nutrients. Nutrien already raised potash production guidance by a million tonnes for the second half of 2021 to accommodate the improved market condition.

PotashCorp and Agrium completed major capital programs before getting together to form Nutrien. This means Nutrien is in a unique position with world-class facilities that can boost output as needed. The business has the potential to generate significant free cash flow by raising production without taking on debt or issuing stock for capital funds to build new sites.

Nutrien says it has five million tonnes of additional potash production capacity it can use to meet rising demand.

The long-term demand picture should also be positive. Populations growth is expected to boost the number of people on the planet from roughly 7.8 billion in 2020 to 10 billion by 2050. Farmers will need to grow more food to feed the extra humans as well as the animals they want to consume. That outlook bodes well for Nutrien and its investors.

Dividends

Nutrien pays a quarterly dividend of US$0.46 per share. The distribution will likely increase before the end of the year or in early 2022 as a result of the strong market conditions and anticipated free cash flow growth.

Should you buy Nutrien stock now?

Nutrien trades near $72.50 per share at the time of writing. That’s off the 2021 high above $79, so investors currently have a chance to buy the stock on a dip. Additional volatility should be expected, but the outlook for the company over the medium and long term makes Nutrien attractive today for RRSP investors.

It wouldn’t be a surprise to see the share price top $100 by the end of next year, and a surge beyond that level is certainly possible if fertilizer prices see stronger-than-expected upside moves over the next 18 months.

If you have some cash to put to work in a self-directed RRSP, this stock deserves to be on your buy list. Nutrien looks cheap right now and should deliver solid returns.

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.

The Motley Fool recommends Nutrien Ltd. Fool contributor Andrew Walker owns shares of Nutrien.

More on Metals and Mining Stocks

Super sized rock trucks take a load of platinum rich rock into the crusher.
Stocks for Beginners

1 Practically Perfect Dividend Stock Down 7% to Buy for Long-term Income

If you're worried about the future of your investments, then now may be the time to grab onto a stock…

Read more »

Piggy bank and Canadian coins
Metals and Mining Stocks

Is It Too Late to Buy Silver Stocks?

First Majestic Silver (TSX:AG) and other hot silver plays could be ready for more gains in 2025.

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Stocks for Beginners

1 Magnificent Canadian Stock Down But Not Out to Buy Right Now

Don't count out this top basic materials stock, especially as copper prices soar.

Read more »

A worker wears a hard hat outside a mining operation.
Metals and Mining Stocks

Ivanhoe Mines: Buy, Sell, or Hold in July 2025?

Here's what to consider before trading Ivanhoe Mines stock this month. Watch out for July 30th!

Read more »

nugget gold
Metals and Mining Stocks

New Gold: Buy, Sell, or Hold in July 2025?

New Gold is a TSX mining stock that has returned over 100% to shareholders in the last 12 months. Is…

Read more »

todder holds a gold bar
Metals and Mining Stocks

1 Gold Mining Stock That’s My Inflation Protection Play

Agnico Eagle Mines stock has generated inflation-beating returns over the past decade, and the gold stock retains strong growth momentum

Read more »

space ship model takes off
Metals and Mining Stocks

Where Will Barrick Gold Be in 3 Years?

Let's dive into the three year outlook for Barrick Gold (TSX:ABX), a top global player in the increasingly competitive precious…

Read more »

A plant grows from coins.
Metals and Mining Stocks

2 Mining Stocks That Are Screaming Buys in June

Rising metal prices are lifting many mining stocks, but these two companies could still deliver big gains from here.

Read more »