This Canadian Stock Is Down 35% and Nearly Perfect for Long-Term Investors

Nutrien (TSX:NTR) stock is down, but the value case is looking really strong.

Key Points
  • Oversold “free-fall” stocks can be worth buying only if you understand the business and the price is well below your estimate of intrinsic value, with incremental buying helping manage falling-knife risk.
  • Nutrien (NTR) looks like a bargain after a steep drop, offering a ~3.26% yield and dividend-growth appeal while trading around 11.1x forward earnings despite commodity and geopolitical volatility.

There’s really no “perfect” stock to buy at any given time, but for value seekers looking to get the absolute best deal when the market or a few stocks take a bit of a dive, I think that some of the misunderstood free-fallers might be worth checking out. Indeed, oversold conditions might entail jumping into the deep end and looking wrong in a big way after hitting the buy button.

Often, selling begets more selling, as concern turns into fear, as some herd-following investors look to sell just because most others are. It’s hard to catch a falling knife, and investors shouldn’t look to do it unless they love the business behind the stock and, far more important, the valuation, which ought to be well below one’s estimate of intrinsic value.

If there’s a great deal on your radar, and you’ve put in the homework, it’s my opinion that you could be looking at a great buy. To tame the negative momentum, though, perhaps buying incrementally over time could be the way to build a position without having to feel bad if a trade continues to go south after officially becoming a shareholder.

Couple working on laptops at home and fist bumping

Source: Getty Images

Nutrien stock is looking like a bargain

In terms of a Canadian stock that’s deep into a bear market and perhaps closer to a “crash,” one name seems to stand out at a time like this.

Enter shares of Nutrien (TSX: NTR), a dominant fertilizer play that’s close to the top of my radar going into the prime of summer. The stock sports a nice 3.26% dividend yield right here. Not excessive, not lofty, but, at the same time, somewhat generous, given the rate picture and how far rates, especially on bank, energy, pipeline, and insurance stocks, have dipped in recent years. In any case, Nutrien’s dividend growth profile is what should excite investors more than just the upfront yield.

With higher hopes for an Iran peace deal, I think shares of NTR might be timely going into July. The stock has been nosediving, now off 22% from its 52-week high and close to 35% from its 2022 highs. Will those highs be eclipsed anytime soon? Probably not. But I do see the name as an incredible value, especially for those who want a well-supported payout with a strong likelihood of growth.

Too cheap for such a quality dividend payer

At 11.1 times forward price to earnings (P/E), the case for backing up the truck on the major agricultural fertilizer play makes a whole lot of sense, especially for those expecting some normalizing after the Strait of Hormuz starts flowing as it did before the Iran war began. Despite the geopolitical unknowns and the uncertainty behind commodity price moves, I find shares of NTR to be a terrific longer-term play for investors who have the patience to keep collecting while management looks to do its thing and weather the latest wave of storms.

Sure, NTR stock might look like an untimely falling knife, but I’m starting to think there might be a disconnect, especially when you consider the Middle East conflict-driven volatility, which could ease with time.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Nutrien. The Motley Fool has a disclosure policy.

More on Investing

A series of red ladders lead to successively higher levels
Dividend Stocks

Higher Rates Are Back: Can Brookfield Infrastructure Keep Growing Its Payout?

Brookfield Infrastructure's growing cash earnings support its payout, with financing costs setting the pace of the next increase.

Read more »

Business doodle about dividends on chalkboard
Dividend Stocks

2 Canadian Dividend Stocks I’d Buy and Hold for Life

See why Canadian Natural Resources and CN Rail deserve a spot in a buy-and-hold dividend portfolio built to last for…

Read more »

man looks worried about something on his phone
Dividend Stocks

Telus vs. BCE: Which Dividend Looks Better After the Cuts?

Telus and BCE now offer similar starting yields, making payout coverage and recovery demands the more useful comparison.

Read more »

dividends can compound over time
Dividend Stocks

Tamarack Valley Plans a 20% Dividend Hike: Why, and What Investors Should Know

Tamarack Valley plans a 20% dividend boost tied to its $10 billion Headwater merger. See what free cash flow, dividend…

Read more »

A worker wears a hard hat outside a mining operation.
Dividend Stocks

Toromont Stock Jumps 8% as Its Order Backlog Balloons to $2.9 Billion (More Than Double Last Year’s)

Considering its strong third-quarter results, substantial order backlog, healthy growth prospects, and consistent dividend payments, Toromont could be an attractive…

Read more »

shoppers in an indoor mall
Dividend Stocks

What $20,000 in CT REIT Could Pay You Without Selling a Single Unit

CT REIT could turn a $20,000 investment into roughly $93 a month, with rent and payout coverage doing the supporting…

Read more »

Blocks conceptualizing the Registered Retirement Savings Plan
Retirement

RRSP vs TFSA for Retirement? Why Most Canadians Should Be Using Both

Canadians should use both the RRSP and the TFSA in their retirement wealth process. These are the best type of…

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Withdrawals in Retirement: A Tax-Free Source That Can Protect Your Benefits

If you hold Fortis (TSX:FTS) stock in a TFSA, you can withdraw the dividends tax-free.

Read more »