What’s Going on With Nutrien Stock?

Nutrien (TSX:NTR) stock has seen shares rise higher as the company sees more demand for fertilizer starting up once more.

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Hands protect a sprout in fertile soil.

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Nutrien (TSX:NTR) stock used to be the stock of the day. In fact, the stock of early 2022! The company has had a rough few years, but it seems like lately, the company has been making some kind of comeback.

So, with shares up an incredible 17% in May alone, what’s going on with Nutrien stock?

Some history

First, let’s go over some of that history, which caused shares of Nutrien stock to rise so high during 2022. Nutrien is one of the largest producers of potash and other agricultural fertilizers. The prices of these commodities can have a substantial impact on the company’s financial performance. 

At the beginning of 2022, global fertilizer prices were highly volatile due to supply chain disruptions and geopolitical tensions, notably the conflict between Russia and Ukraine. Russia is a major exporter of potash and other fertilizers, and the uncertainty around supply from this region caused significant price swings, which in turn affected Nutrien’s stock price.

Furthermore, broader global supply chain issues, exacerbated by the COVID-19 pandemic, also played a role. Delays and increased costs in transportation and logistics affected the entire agriculture sector, including companies like Nutrien stock. These disruptions contributed to the volatility in the stock as investors tried to assess the impact on Nutrien’s operations and profitability.

What’s happening lately?

On the surface, not much has changed. Potash prices have remained at a downward trend in 2024, but other fertilizers have been a bit more complex. Fertilizer prices, including urea, DAP (diammonium phosphate), and anhydrous ammonia, showed a decline from the highs of 2022, likely due to factors like increased production in China and lower crop demand from the 2023 drought in some regions.

Yet lately, some prices have started to increase slightly. This has come from limited fertilizer purchases by Brazilian farmers due to the drought impacting their safrinha corn production. Furthermore, there has been uncertainty in global trade flows caused by situations like potential disruptions in the Red Sea and China tightening its fertilizer exports.

Nutrien stock specifics

Alright, so with fertilizer prices remaining volatile, why has Nutrien stock been rising? It’s due to earnings and demand. The company was off to a great start to the year, with first-quarter finances showing a strong and growing trend.

In particular, there was a robust demand for crop inputs from growers, which bolstered sales and earnings. Nutrien increased its potash shipments to key global markets, boosting overall sales volumes. Furthermore, the company achieved higher operating rates and reduced costs, particularly benefiting from lower natural gas prices.

Add to this that Nutrien stock maintained its full-year 2024 guidance for retail adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and fertilizer sales volumes, signalling confidence in its ongoing performance.

Change is coming

Yet it’s not only the current performance seeing the stock grow higher. The company initiated the process to divest its retail assets in Argentina, Chile, and Uruguay, aiming to focus on core businesses and improve earnings quality and free cash flow. Furthermore, Nutrient stock’s strategic initiatives and strong market position likely contributed to positive sentiment among investors, leading to a rise in stock price. So, with shares up 17% yet still offering a 3.59% dividend yield, now could be the time to get back into Nutrien stock.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Nutrien. The Motley Fool has a disclosure policy.

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