Fertilizer stocks aren’t exactly the most exciting plays to be in right now, especially as tech and the Nasdaq take centre stage. Right now, the leading fertilizer stocks are in the process of recovering from a bear market. And though the bottom may very well be in (along with the lows for various agricultural commodities), I think that the undervalued, even neglected names could be a great place to put new money to work if you’re expecting another one of those rotations out of artificial intelligence leaders and into high-yielding value stocks to happen again in the second half of the year.
These days, the broad market seems almost untouchable. Even the threat of 35% tariffs on goods imported into the U.S. from Canada hasn’t really been able to strike fear into the hearts of investors. Perhaps they’ve moved on and don’t expect President Trump to maintain such widespread tariffs for all too long. That is, if they stick to begin with.
Either way, investors aren’t biting their nails as much as the deadline approaches. In any case, making moves based on such near-term noise (at least in my humble opinion) is a mistake that could cost you more money than you gain.
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Nutrien stock: Feed your portfolio with a nice dividend
Of course, tariff volatility is a thing, and we, as investors, must be ready to ride out the waves. And while Nutrien (TSX:NTR) stock, my preferred fertilizer stock to stash away for the long run, has been a tad choppier than broad markets, I find it to be an unloved value play (even analysts have turned their back on the stock lately) that could be on the cusp of one of its next multi-year bull runs. Indeed, Nutrien shareholders know as well as anyone that the big booms and busts come with the territory of investing in fertilizer stocks.
In any case, I think Nutrien is a great way to score sustainable passive income (a 3.78% yield isn’t too bad, even if the bear market still has pain in store for investors) while getting a front-row seat to a potential potash and nitrogen price rebound. Now, I have no idea if potash and nitrogen will recover in the second half or in several years from now. Either way, investors are sure to chase the fertilizer plays after such commodities experience significant enough strength.
And though there’s upside to be had if the two major commodities were to surge again, I think Nutrien’s stellar management is a top reason to stick with the firm, even through hard times.
Why? They’ve done a good job of driving cost savings via efficiency efforts. The company’s savings plan could literally pay dividends over the long term. If fertilizer prices stay grounded, I’m pretty confident in the firm’s ability to weather the choppy times.
As the company heads into its upcoming earnings report, I’d be inclined to buy half a position now and the other half after the bell should the numbers come in short of expectations.
