Shares of Mosaic (MOS) touched yet another 52-week high of $53.83 on Feb 25, exceeding the previous high of $53.43. The stock retraced a bit to close the day at $53.56.
Mosaic, which has a market cap of roughly $19.7 billion, has racked up a year-to-date return of 17.3%, higher than the S&P 500’s corresponding return of 3%. Average volume of shares traded over the last three months is roughly 3,233.3K. The company’s long-term projected earnings per share growth is around 11.3%.
What’s Driving MOS Up?
Shares of Mosaic are heading higher following its buoyant fourth-quarter 2014 results, reported on Feb 11. Mosaic’s profits for the quarter shot up nearly three-fold on increased potash volumes and higher pricing in its core phosphate business. The company witnessed increased demand in the quarter as customers looked to replenish inventories ahead of the North American spring application season.
Mosaic’s adjusted earnings for the quarter beat the Zacks Consensus Estimate. Revenues jumped year over year on gains across both phosphate and potash businesses and also beat expectations. Mosaic expects strong demand to continue this year.
Mosaic, a Zacks Rank #2 (Buy) stock, is expected to gain from its strategic actions in 2015. It is poised to benefit from rising global demand for grain and oilseeds.
Mosaic should benefit from its efforts to boost production capacity and acquisitions. Its phosphate business is expected to benefit from favorable pricing and lower raw material costs.
The acquisition of CF Industries’ (CF) phosphate business has reinforced Mosaic’s production capacity of phosphate in Florida. The buyout will bring the company’s annual phosphates capacity to roughly 11.5 million tons and provide meaningful operational synergies.
In addition, the acquisition of Archer Daniels Midland's fertilizer distribution business will also accelerate Mosaic's existing growth plans in Brazil and boost its annual distribution capability in one of the world’s fast-growing agricultural regions.
Mosaic also remains committed to beef up its annual potash production capacity by roughly 5 million tons from the current levels. It is making a good progress with capacity expansion at its Esterhazy potash mine (the K3 project) with deliveries from the expansion is expected in 2017. The company is also on track with its joint venture project in Saudi Arabia.
Other Stocks to Consider
Other companies in the fertilizer space with favorable Zacks Rank include Yara International ASA (YARIY) and Agrium Inc. (AGU). While Yara holds a Zacks Rank #1 (Strong Buy), Agrium retains a Zacks Rank #2 (Buy).
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