Nutrien (TSX:NTR) has experienced a mixed performance since its creation in 2018, following the merger of Agrium and Potash Corp. While the stock has delivered annualized total returns of just 2.3%, it has seen periods of significant volatility that make it a potential candidate for active investors. As we head into 2025, is Nutrien stock a buy, sell, or hold?
A cyclical stock with big ups and downs
Nutrien’s performance has been closely tied to the cyclical nature of the agricultural sector. While its long-term returns have only kept pace with inflation, there have been periods where the stock performed exceptionally well. A prime example is the pandemic market crash of March 2020, when Nutrien’s stock hit a low of around $40 per share. By April 2022, it had surged to approximately $141, delivering a staggering 265% return — an annualized total return of 87% for those fortunate enough to time the market perfectly.
This surge was driven by a spike in earnings and cash flow, showcasing the inherent volatility of the stock. The key takeaway here: Nutrien’s performance hinges on timing, as it’s crucial for investors to buy low and sell high in this cyclical stock.
What’s next for Nutrien stock?
Currently, Nutrien is down about 50% from its 2022 peak. But a lower price doesn’t necessarily signal an immediate buying opportunity. The stock could continue to decline before finding a bottom. To mitigate risk, investors might consider waiting for a consolidation phase, which typically occurs when the stock starts forming higher lows and breaks out.
For example, in late 2020, Nutrien stock formed higher lows after bottoming out in March 2020. Investors who waited for this breakout and bought at around $55 per share at the beginning of 2021 would have seen a solid 45% return in just one year, as the stock climbed to about $80. Those who held onto the stock for the entire 2022 rally would have seen even greater gains, multiplying their investment by 2.5 times.
A safe strategy: Buy and hold for the dividend
For investors not inclined to time the market, Nutrien still offers an attractive dividend yield of nearly 4.7%. While the stock price may be volatile, the company has consistently increased its dividend since its merger in 2018, with a compound annual growth rate of 5.1%.
Nutrien’s strong position in the agricultural sector, particularly in potash and nitrogen production, as well as its role as the number one agriculture retailer, ensures its relevance in an ever-growing global food market. With billions of mouths to feed, Nutrien’s products remain in demand, which adds a level of stability to the stock.
However, it’s important to note that Nutrien’s dividend is paid in U.S. dollars, so Canadian investors may experience fluctuations due to changes in the exchange rate between the two currencies.
Analyst outlook for 2025: A buy with caution
Currently, analysts believe Nutrien is undervalued by about 19%, with near-term upside potential of around 23%. This suggests that, at its current price, the stock may be a reasonable buy for those looking to invest in 2025. However, for more cautious investors, it’s recommended to wait for a clearer consolidation pattern to ensure a safer entry point.
The Foolish investor takeaway
After the multi-year selloff, Nutrien stock presents an interesting opportunity for investors in 2025, but its cyclical nature and volatility make it a stock that requires careful timing. For those willing to take a more passive approach, the nice dividend yield makes it a solid hold, while active traders may want to wait for signs of a safer entry point. Ultimately, Nutrien’s role in the essential agricultural industry ensures its long-term relevance, but timing will be key to achieving optimal returns.
