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Tickers in this Article: MOS, POT, AGU, CF
From the looks of it, crop nutrient company Mosaic (NYSE:MOS) is just another victim of the recession. To a certain degree that is indeed the case, but it's not the whole story.

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Looking at All the Numbers
On Monday, Mosaic announced fiscal 2010 first-quarter earnings. Sales came in at $1.4 billion versus $4.3 billion. Net earnings were hit even harder, with Mosaic earning $100 million against $1.2 billion a year ago. While both these figures are below analyst estimates, the revenue figure matched estimates.

The sales declines that most other industries are experiencing, in excess of 20% in some cases, indicates that the demand still exists, just at lower prices. And that is simply due to farmers deferring purchases and instead selling off existing inventory.

Potash and phosphate sales were both down substantially. This was no surprise to the company. Last year, in the face of increasing crop prices, farmers loaded up on fertilizers. As a result, the most dominant players like Mosaic, Potash Corp (NYSE:POT), Agrium (NYSE:AGU) and CF Industries (NYSE:CF) saw their share prices surge dramatically.

When the recession became widespread, farmers stopped buying fertilizers and instead opted to work down existing inventory.

Strong Fundamentals
As that inventory begins to disappear, demand will again stabilize. Nutrient prices might not reach the peak prices achieved in 2008, but anyone that has grown crops - large scale or small scale - will agree that fertilizer application is a win-win scenario. The money you spend delivers a strong positive return on investment in the form of bigger crop yields. (For related reading, check out Recession-Proof Your Portfolio.)

In addition, crop prices appear to be stabilizing and as a result so do fertilizer prices. Mosaic is forecasting phosphate prices of $265-$305 in the second fiscal quarter, approximately the same as prices in the first quarter. Of course, this is without any indication of what China's purchasing plans will be.

A Recession Stock
Fertilizer companies enable farmers to grow more food, the most basic of human needs. Such demand will not go away forever. After Mosaic announced its earnings, the stock opened up over 5%. Don't expect the shares to breach $100 anytime soon, but as the company begins to deliver earnings growth again, the growth investors will likely pile in, rewarding value investors today. (For more, check out The Ups and Downs Of Investing In Cyclical Stocks.)

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