5 Things to Know About Nutrien Stock in November 2022

Should you buy NTR stock?

| More on:
a person searches for information on the internet

Source: Getty Images

Though fertilizer prices have been higher, Nutrien (TSX:NTR) stock has been quite volatile this year. It has been on a terrible downtrend this month, especially after its earnings for the third quarter (Q3) of 2022.

Let’s see what the stock has in store for the future.

Competitive advantage

Nutrien is a $56 billion fertilizer company that makes potash, nitrogen, and phosphate. Its scale and integrated model play well optimizing costs and increasing profitability. In the last three years, the company has increased its volume sold through the retail network by 20%. This has notably improved its efficiency and has expanded gross margins.

Last year, there were enormous supply chain challenges due to geopolitical tensions that weighed on the global fertilizer markets. However, Nutrien’s integrated network from operations to retail channel stood strong and supported its sales and margin expansion.

Financial growth

Nutrien has enjoyed handsome earnings growth this year thanks to higher fertilizer prices. In the last nine months, it reported a net income of $6.6 billion — an increase of a massive 240% year over year. Crop input supply has been tight this year due to the war in Europe and lower output from Belarus.

However, despite the strong growth so far, Nutrien lowered its guidance for 2022 early this month. It expects lower potash sales in Q4 2022 mainly due to higher inventory levels and cautious buying in North America and Brazil.

It now expects adjusted net earnings of US$13.9 per share this year, down from US$16.8 per share from its earlier guidance. A huge cut in guidance was evidently unwelcomed by investors, and the stock tumbled 14% on November 3.

Demand drivers

Prices of key crops like corn, soybean, and wheat are up 25-50% this year compared to the 10-year average. Higher expected crop prices will likely encourage farmers to boost production next year, ultimately increasing demand for NTR products.

Weather has been favourable in North America, which will ramp up activity and boost ammonia demand in the fall. Potash shipments from Eastern Europe are expected to decline significantly next year, so Nutrien could swoop in to fill the void.


This year has been favourable for NTR and its investors. Despite the recent turmoil, it has returned 15% so far, beating broader markets. However, its exposure to commodity prices makes it a risky bet. There is a large element of cyclicality that drives its shareholder returns.

As a result, even though NTR has managed to outperform this year, it may not continue the streak in the long term. Plus, it is highly risky to enter cyclical stocks when their profit margins are at peaks. Note that NTR is seeing record margins this year. Its gross margin has come in at 43% in the last 12 months compared to its five-year average of 32%.


NTR stock is currently trading six times its earnings and looks undervalued compared to peers. It looks fairly valued compared to its historical average. Note that cyclical stocks like NTR generally underperform in higher inflationary environments.

So, its depressed multiple indicates subdued growth expectations from investors. However, if the fertilizer prices remain higher for longer, this could turn out to be a smart value bet.

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. The Motley Fool has a disclosure policy. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Stocks for Beginners

man is enthralled with a movie in a theater
Stocks for Beginners

Cineplex Stock Rose 10% in November: Is it a Buy Today?

Should you buy CGX stock?

Read more »

retirees and finances
Stocks for Beginners

TFSA Investors: 3 Solid Stock Ideas for Your $6,500 Limit in 2023

Here are three potential long-term winners for TFSA investors.

Read more »

Man considering whether to sell or buy
Stocks for Beginners

December 2022: Is it Better to Pull Your Money Out of the Stock Market or Keep Investing for Now?

Time in the market always beats timing the market. Diversify and stay the course.

Read more »

Paper airplanes flying on blue sky with form of growing graph
Stocks for Beginners

Stocks That Are Actually Soaring in a Down Market

Fairfax Financial Holdings and another TSX stock that's powered higher through a bearish 2022.

Read more »

Stocks for Beginners

CP Stock Could Be the Best Buy on the TSX Today

CP (TSX:CP) stock has been one of the few top performers on the TSX this year, and it should continue…

Read more »

falling red arrow and lifting
Stocks for Beginners

3 TSX Stocks That Could Rally Before 2023 Begins

Here are three TSX stocks to consider, even if inflation remains adamant next year.

Read more »

oil and natural gas
Energy Stocks

2 TSX Energy Stocks That Could Break Through the Roof in December 2022

Did you miss the energy rally? Here are two TSX energy stocks that still offer handsome growth potential.

Read more »

Dividend Stocks

If I Could Only Buy 1 Stock Before 2023, This Would be it!

If you could buy 1 stock before 2023, what would it be? Here’s the stock I’m considering, and I think…

Read more »