Is Nutrien Stock a Buy in May 2023?

Nutrien Ltd. (TSX:NTR) stock can offer you excellent value in May 2023, as it inches closer to its 52-week lows.

| More on:
Hands protect a sprout in fertile soil.

Source: Getty Images

When it comes to undervalued stocks, the cyclical nature of the stock market offers plenty of options for Canadian investors to consider on the TSX right now. Amid the macroeconomic factors impacting publicly traded companies, several high-quality stocks have also declined on the stock market.

Identifying and investing in beaten-down stocks trading below intrinsic values can help you leverage massive capital gains for wealth growth.

Today, I will discuss a top Canadian agriculture stock, Nutrien (TSX:NTR). As the largest potash producer and third-largest nitrogen fertilizer producer worldwide, Nutrien stock can be a top stock to consider. However, its share prices have declined significantly in recent months. We will discuss whether this agriculture stock can be worth adding to your portfolio in May 2023.

Nutrien stock’s performance in the last year

As the chart above shows, Nutrien stock is not having the best year. Nutrien stock started 2023 on a strong note, climbing by 14.86% in January 2023. However, its share prices began fluctuating after February began. As of this writing, Nutrien stock trades for $94.23 per share, which is near its 52-week low of $91.08 per share.

2022 painted an entirely different picture for the Canadian agriculture stock. Russia’s invasion of Ukraine led to a massive disruption in the global fertilizer industry. Due to the conflict, Nutrien stock found an unlikely tailwind. Nutrien stock gained substantial momentum in the winter and spring of 2022, climbing to record highs.

What boosted Nutrien stock?

Russia’s full-scale invasion of Ukraine in 2022 shook the world. The war has changed the global agriculture landscape. Ukraine is one of the world’s largest grain exporters and boasts some of the most nutrient-rich and fertile land. Due to the conflict, Ukraine’s ability to capitalize on its position as a major agricultural nation became compromised.

Enter Canada and Nutrien. Canada also boasts plenty of fertile land, and it has the advantage of being the country where Nutrien is based. As one of the biggest players in the agriculture space, Nutrien stock saw a boost in its sales as the world recalibrated itself to meet the changing dynamics in the agriculture space.

Over a year into the conflict, Ukraine’s agricultural production is on the mend. Between support from its allies and sanctions on Russia, Ukraine has managed to reorient its agricultural production. The June and July season this year will not see any limits on Ukraine’s wheat exports, suggesting that the industry is returning to a certain sense of normalcy.

As good a development as it is for Ukraine, it might suggest some issues for Nutrien stock.

Nutrien stock’s financial performance

Nutrien stock’s full-year earnings came out on February 15, 2023. The company’s management acknowledged the role of the conflict in the massive surge in its business in 2022.

While Ukraine’s top agriculture ministry officials say that the country’s production is returning to better days, Nutrien’s management believes the contrary. Nutrien believes that Ukraine’s agricultural production may continue lagging for at least another season as the war continues.

In fiscal 2022, Nutrien generated $7.7 billion in net earnings, saw its sales rise by 37%, and its earnings before interest, taxes, depreciation, and amortization (EBITDA) increase by 71% year over year. Nutrien stock’s retail adjusted EBITDA soared to an all-time high of $2.3 billion in fiscal 2022.

Foolish takeaway

As the stock hovers close to its 52-week lows, Nutrien trades at an attractive trailing price-to-earnings ratio of 5.07, suggesting the stock is oversold. While its performance might take a hit with developments in geopolitical issues, it can be an excellent long-term investment.

Nutrien stock is effectively consolidating a highly fractured industry. It has issued a full-year 2023 guidance for adjusted EBITDA to hit between US$8.4 billion and US$10 billion. Ramping up its low-cost potash production might help it achieve the figure.

In the longer run, its position as a leading presence in the global fertilizer space can deliver substantial returns to its investors. It might be worth adding to your portfolio, as it stays close to its 52-week low heading into May 2023.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Nutrien. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Happy Retirement” on a road
Dividend Stocks

3 TSX Stocks That Can Turn Retirement Dreams Into Reality

Looking for income that lasts right through retirement? These three TSX stocks are the best to make your retirement dreams…

Read more »

Growing plant shoots on coins
Dividend Stocks

Better Buy in August: Passive-Income or Growth Stocks?

With a steady mix of passive-income and growth stocks, investors can create a prime portfolio even during market volatility.

Read more »

a person prepares to fight by taping their knuckles
Dividend Stocks

3 Defensive TSX Stocks for Lower-Risk Investors

These three TSX stocks are all high-quality companies with defensive businesses, making them ideal for low-risk investors.

Read more »

ETF chart stocks
Dividend Stocks

2 Canadian ETFs to Buy and Hold Forever in Your TFSA

ETFs like iShares Canadian Quality Dividend ETF (TSX:DIV) have delivered admirable total returns.

Read more »

TFSA and coins
Dividend Stocks

How to Use Your TFSA to Earn $5,000 Per Year in Tax-Free Income

Canadian stocks like Canadian National Railway (TSX:CNR) can pay substantial amounts of dividends.

Read more »

money cash dividends
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Here are some key reasons why this top Canadian dividend stock could continue to outperform the TSX Composite benchmark in…

Read more »

financial freedom sign
Dividend Stocks

3 Stocks to Buy Now That Could Help You Retire a Millionaire

These three stocks are all reliable and have years of growth potential, making them some of the best stocks to…

Read more »

Target. Stand out from the crowd
Dividend Stocks

This 4.1 Percent-Yielding Dividend Stock Remains a Top Choice for Passive Income

Canadian Natural Resources offers shareholders a tasty dividend yield of over 4% and has grown its dividends by 21% over…

Read more »