People need various commodities or raw materials to make habitable living conditions. Energy stocks (oil and gas) and basic materials stocks (gold and other metals) are the hottest items because of surging commodity prices. However, the bull run could end soon because of a tight market.
As of this writing, oil prices are on a downtrend. WTI crude fell below US$95 per barrel, while Brent futures slid below US$100. But besides the price drops, the disruption on Russian oil supply poses a bigger problem. An oil shortage is inevitable if there’s a supply gap.
Meanwhile, investors can move to other commodity stocks. Nutrien (TSX:NTR)(NYSE:NTR), the TSX’s top agriculture stock, is among the steadiest performers in this thus far in 2022. If you want cheaper options, consider Cameco (TSX:CCO)(NYSE:CCJ) and Rogers Sugar (TSX:RSI).
Essential in food production
Nutrien’s competitive advantage is its business model. The $70 billion company is the world’s largest provider of crop inputs and services. Besides its enormous capacity (27 million tonnes) in producing potash, nitrogen, and phosphate products, it has a vast agriculture retail network.
In Q4 2021, consolidated sales and net earnings increased 79% and 282% versus Q4 2020. The adjusted EBITDA of US$7 billion during a quarter was a record. For the full-year, the top and bottom lines grew 33% and 593%, respectively, compared with the full-year 2020.
Ken Seitz, Nutrien’s interim president and CEO, said, “The advantages of Nutrien’s integrated business were demonstrated in 2021 as we delivered record financial results and made significant progress on our long-term strategic targets.” He added that the outlook for global agriculture and crop input markets is very strong.
The impressive financial results reflect in the stock performance. At $127.12 per share, the year-to-date gain is 33.7%. Nutrien also pays a 1.89% dividend.
High-demand uranium fuel
Cameco is fast approaching its 52-week high of $36.06. At $33.03 per share, the trailing one-year price return is 42.7%. Also, current investors are up 19.8% year to date. Market analysts’ high price target in 12 months is $40.50 (+22.6%). The overall return to would-be investors should be higher if you factor in the 0.34% dividend.
The $12.87 billion company provides uranium fuel worldwide. According to management, Cameco maintains a competitive position, because of its controlling ownership of the world’s largest high-grade reserves and low-cost operations. The nuclear fuel products are in high demand. Global Utilities rely on them to generate power in safe, reliable, carbon-free nuclear reactors.
Rogers Sugar hardly experiences wild price swings. Sugar production is a low-growth business, although it’s enduring. Moreover, the soft commodity is a consumer staple that people and businesses use every day.
In Q1 2022, the $655.58 million company reported revenue and net earnings growth of 3.1% and 25.1% versus Q1 2021. Mike Walton, president and CEO of Rogers and Lantic, said, “We felt greater volatility in customer demand and experienced some unforeseen events impacting our supply chain.”
Management maintains a positive outlook for 2022 due to improved gross margin on sugar and stable volume forecast for sugar and maple. The share price is $6.35, while the dividend yield is a generous 5.71%.
Nutrien, Cameco, and Rogers Sugar are alternative safety nets in this highly volatile market and potential oil crisis