Mosaic (MOS) Stock Up 40% YTD: What's Driving the Rally?
Mosaic (MOS) benefits from higher prices and demand for phosphate and potash and its cost-management actions.
The Mosaic Company's MOS shares have shot up 39.7% so far this year. The company has also outperformed its industry’s rise of 17.3% over the same time frame. Moreover, it has topped the S&P 500’s 20.8% rise over the same period.
Let’s take a look into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.
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What’s Favoring MOS?
Mosaic is benefiting from higher prices and demand for phosphate and potash. Better-than-expected earnings performance in the first two quarters of 2021 and an upbeat outlook have also contributed to the run-up in its shares.
The company, in its second-quarter call, said that it expects strong agricultural trends to continue through the second half of 2021, driving demand for fertilizers. Grower economics remain attractive in most global growing regions on strong crop demand, affordable inputs and favorable weather, Mosaic noted.
Higher agricultural commodity prices and attractive farm economics are driving demand for fertilizers globally. Global phosphate markets remain robust on solid demand and pricing dynamics. Tight availability along with firm demand is driving up phosphate prices globally. Potash prices have also strengthened on the back of robust global demand, aided by strong grower economics and higher crop prices.
The company is also taking measures to cut costs amid a still-challenging operating environment. Its actions to improve its operating cost structure through transformation plans are expected to boost profitability. Transformational savings are also expected to drive margins in its Mosaic Fertilizantes segment.
Mosaic, last month, announced that its board has approved a new $1 billion share buyback authorization. This replaces the earlier authorization which had $700 million of the original $1.5 billion remaining.
The company noted that this share repurchase authorization reflects its ongoing commitment to balanced capital allocation. The successful transformation of business has allowed it to invest in growth, strengthen the balance sheet and return capital to shareholders. With an improving cost position and balance sheet, the company is well-poised for the future.
Earnings estimates for Mosaic have also been going up over the past two months. Over the past month, the Zacks Consensus Estimate for 2021 has increased 45.3%. The consensus estimate for third-quarter 2021 has also been revised 80.6% upward over the same time frame.
The Mosaic Company Price and Consensus
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include BASF SE BASFY, Dow Inc. DOW and Avient Corporation AVNT, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
BASF has an expected earnings growth rate of 96.7% for the current year. The company’s shares have gained around 22% in the past year.
Dow has a projected earnings growth rate of 403% for the current year. The company’s shares have rallied around 30% in a year.
Avient has an expected earnings growth rate of 75.1% for the current fiscal year. The stock has also surged around 84% over a year.
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