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Nutrien (NTR) Shares Rally 35% YTD: What's Driving the Stock?

Nutrien (NTR) benefits from higher prices and healthy demand for crop nutrients.

This story originally appeared on Zacks

Nutrien Ltd.’s NTR shares have gained 34.8% so far this year, outperforming the industry’s rise of 24.9%. The company has also topped the S&P 500’s 18.5% rise over the same period.

Let’s dive into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.

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What’s Favoring the Stock?

Nutrien is benefiting from higher prices and healthy demand for crop nutrients. It is also gaining from acquisitions, cost efficiency, and increased adoption of its digital platform. An upbeat outlook for 2021 has also contributed to the run-up in the company’s shares.

The company is seeing solid demand and higher prices for fertilizers, especially potash, supported by the strength in global agriculture markets. It is expected to gain from strong potash sales volumes this year on the back of solid domestic and overseas demand.

Nutrien is also benefiting from higher net realized selling prices for crop nutrients as witnessed in the second quarter. Potash prices have strengthened on the back of robust global demand, aided by strong grower economics, higher crop prices, and low global inventory levels. Tight availability along with firm demand is also driving up phosphate prices globally. Lower global supply availability stemming from reduced operating rates and a spike in energy prices are also likely to boost nitrogen prices. Higher prices are expected to drive the company’s sales and margins in 2021.

The company is also taking actions to boost potash production in the wake of tightening global potash market conditions. The move is in response to strong market fundamentals and is geared to enable its customers have the crop inputs they require to feed a growing population. The company expects to produce one million tons of incremental potash in 2021 as a result of this move.

Nutrien, in August, bumped up its adjusted net earnings per share and adjusted EBITDA guidance to $4.60-$5.10 (from $2.55-$3.25) and $6-$6.4 billion (from $4.4-$4.9 billion), respectively, for full-year 2021. The revision reflects higher expected results across its business and the benefits of increasing its potash sales guidance for 2021 by one million tons.

Earnings estimates for Nutrien have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased 25%. The consensus estimate for third-quarter 2021 has also been revised 38.9% upward over the same time frame.

Other Stocks to Consider

Some other top-ranked stocks worth considering in the basic materials space include The Mosaic Company MOS, United States Steel Corporation X, and AdvanSix Inc. ASIX, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mosaic has an expected earnings growth rate of 471.8% for the current year. The stock has rallied around 94% over a year.

U.S. Steel has a projected earnings growth rate of 382.9% for the current year. The company’s shares have shot up around 188% in a year.

AdvanSix has a projected earnings growth rate of 160.4% for the current year. The company’s shares have surged around 209% in a year.

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