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3 Top Fertilizer Stocks to Watch From a Promising Industry
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The Zacks Fertilizers industry is expected to benefit from favorable demand fundamentals for major crop nutrients, including phosphate and potash. The underlying strength of the agricultural market and attractive farm economics are spurring demand for fertilizers globally.
Industry players such as Nutrien Ltd. (NTR - Free Report) , CF Industries Holdings, Inc. (CF - Free Report) and ICL Group Ltd (ICL - Free Report) are poised to gain from higher demand for fertilizers in the major markets. While weak fertilizer prices pose headwinds, factors like healthy farm income and expectations of increased planted acres are expected to drive crop nutrient demand globally in the near term.
About the Industry
The Zacks Fertilizers industry comprises producers, distributors and marketers of crop nutrients for the global agriculture industry. Companies in this space offer nutrients such as phosphates (including diammonium phosphate, monoammonium phosphate and phosphoric acid), potash and nitrogen (including urea, ammonia and urea ammonium nitrate) fertilizers. They also provide other nitrogen products to help farmers maximize crop yield. Crop nutrients are essential to drive agricultural productivity and boost the natural fertility of the soil. Demand for these nutrients is being supported by the need to increase the production of grains to address rising food consumption globally. Moreover, the constant need of growers to nourish their crops, replenish nutrients in the soil following a harvest and boost yields to feed a growing global population drives the consumption of fertilizers.
What's Shaping the Future of the Fertilizers Industry?
Healthy Demand for Crop Nutrients: The companies in the fertilizers space are well-placed to benefit from healthy global demand for major crop nutrients. In the United States, healthy farm profits and high levels of planted acreage are expected to drive demand for fertilizers. Strong farmer economics should support demand in major markets such as Brazil and India. The phosphate market is benefiting from higher global demand and low producer and channel inventories. Strong grower economics, improved affordability and low inventory levels are also expected to drive potash demand globally. Demand for nitrogen fertilizer remains healthy in major markets, backed by significant agricultural demand and recovering industrial demand. High levels of corn planted acres and low nitrogen channel inventories should drive demand for nitrogen in North America. Also, demand for urea imports in Brazil and India remains favorable.
Agricultural Fundamentals Remain Favorable: Fundamentals in the broader agriculture space remain positive, given the sustained rise in food demand globally. While prices of corn, soybean and wheat have declined from the multi-year highs reached in 2022, they remain supportive. Farmer economics also remain attractive in most global growing regions on strong crop demand. Per the U.S. Department of Agriculture’s (USDA) latest outlook, net farm income is projected to climb 29.5% year over year to $180.1 billion this year, driven by a significant increase in government payments. USDA forecasts direct government payments at $42.4 billion in 2025, a 354.5% surge from 2024. Solid farm income is likely to drive farmers’ spending on crop nutrients this year. Expectations of high levels of planted corn and soybean acres globally also suggest a pickup in fertilizer demand.
Softer Fertilizer Prices to Weigh on Margins: Prices of phosphate and potash have retreated since the back half of 2022 from their peak levels attained in the first half, riding on the impacts of the Russia-Ukraine war and disruptions due to the sanctions in Belarus. Global nitrogen prices have also declined since the beginning of 2023. Higher global supply, driven by increased global operating rates due to lower global energy costs, has resulted in a decline in nitrogen prices. While fertilizer prices have stabilized somewhat, weaker year-over-year prices are likely to dent the profitability of companies in this space over the near term.
Zacks Industry Rank Reflects Upbeat Prospects
The Zacks Fertilizers industry is part of the broader Zacks Basic Materials sector. It carries a Zacks Industry Rank #39, which places it in the top 16% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates a bright near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms Sector & S&P 500
The Zacks Fertilizers industry has underperformed both the Zacks S&P 500 composite and the broader Zacks Basic Materials sector over the past year.
The industry has lost 1.1% over this period against the S&P 500’s rise of 23.3% and the broader sector’s increase of 0.7%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, which is a commonly used multiple for valuing fertilizer stocks, the industry is currently trading at 10.98X compared with the S&P 500’s 17.67X and the sector’s 11.51X.
In the past five years, the industry has traded as high as 21.88X and as low as 4.97X, with a median of 10.71X, as the chart below shows.
Enterprise Value/EBITDA (EV/EBITDA) Ratio
Enterprise Value/EBITDA (EV/EBITDA) Ratio
3 Fertilizer Stocks to Keep a Close Eye on
Nutrien: Canada-based Nutrien is a leading provider of crop inputs and services. The company is benefiting from higher demand for crop nutrients on strength in the global agriculture markets. It is seeing strong demand in its major markets, particularly North America. NTR is also gaining from acquisitions, cost efficiency and increased adoption of its digital platform. The company also continues to expand its footprint in Brazil through acquisitions. Lower natural gas costs are also acting in NTR’s favor.
Nutrien currently carries a Zacks Rank #2 (Buy). NTR has expected earnings growth of 5.9% for 2025. The Zacks Consensus Estimate for 2025 earnings has been revised 1.6% upward over the past 60 days. It also has an expected long-term earnings per share growth rate of 12%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: NTR
ICL Group: Israel-based ICL is engaged in the fertilizer and specialty chemical sectors. The company remains focused on growing its specialties businesses. Efforts to boost operating efficiency and productivity and the launch of new innovative solutions should support its results. The acquisition of Nitro 1000 also allows ICL to expand its market position and leadership in Brazil's specialty plant nutrition. The buyout of Custom Ag Formulators also expanded its global Growing Solutions business. The new food specialty plant in China will also strengthen relationships with existing customers while exploring new business opportunities in the country. Moreover, ICL's investment in Plantible Foods demonstrates its commitment to developing sustainable and innovative food-sector solutions.
ICL Group currently carries a Zacks Rank #2. It has expected earnings growth of 14.4% for 2025. ICL’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 18.1%, on average.
Price and Consensus: ICL
CF Industries: Illinois-based CF Industries is a leading global manufacturer of nitrogen and hydrogen products for fertilizer, clean energy, emissions reduction and other industrial applications. It is gaining from higher nitrogen fertilizer demand in the major markets. CF is seeing higher nitrogen demand for industrial uses in North America. Lower natural gas prices are also acting in the company’s favor. CF remains committed to boosting shareholders’ value by leveraging strong cash flows.
CF Industries currently carries a Zacks Rank #3 (Hold). It has a trailing four-quarter earnings surprise of roughly 10.3%, on average. CF also has an expected long-term earnings per share growth rate of 37%.
Price and Consensus: CF
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3 Top Fertilizer Stocks to Watch From a Promising Industry
The Zacks Fertilizers industry is expected to benefit from favorable demand fundamentals for major crop nutrients, including phosphate and potash. The underlying strength of the agricultural market and attractive farm economics are spurring demand for fertilizers globally.
Industry players such as Nutrien Ltd. (NTR - Free Report) , CF Industries Holdings, Inc. (CF - Free Report) and ICL Group Ltd (ICL - Free Report) are poised to gain from higher demand for fertilizers in the major markets. While weak fertilizer prices pose headwinds, factors like healthy farm income and expectations of increased planted acres are expected to drive crop nutrient demand globally in the near term.
About the Industry
The Zacks Fertilizers industry comprises producers, distributors and marketers of crop nutrients for the global agriculture industry. Companies in this space offer nutrients such as phosphates (including diammonium phosphate, monoammonium phosphate and phosphoric acid), potash and nitrogen (including urea, ammonia and urea ammonium nitrate) fertilizers. They also provide other nitrogen products to help farmers maximize crop yield. Crop nutrients are essential to drive agricultural productivity and boost the natural fertility of the soil. Demand for these nutrients is being supported by the need to increase the production of grains to address rising food consumption globally. Moreover, the constant need of growers to nourish their crops, replenish nutrients in the soil following a harvest and boost yields to feed a growing global population drives the consumption of fertilizers.
What's Shaping the Future of the Fertilizers Industry?
Healthy Demand for Crop Nutrients: The companies in the fertilizers space are well-placed to benefit from healthy global demand for major crop nutrients. In the United States, healthy farm profits and high levels of planted acreage are expected to drive demand for fertilizers. Strong farmer economics should support demand in major markets such as Brazil and India. The phosphate market is benefiting from higher global demand and low producer and channel inventories. Strong grower economics, improved affordability and low inventory levels are also expected to drive potash demand globally. Demand for nitrogen fertilizer remains healthy in major markets, backed by significant agricultural demand and recovering industrial demand. High levels of corn planted acres and low nitrogen channel inventories should drive demand for nitrogen in North America. Also, demand for urea imports in Brazil and India remains favorable.
Agricultural Fundamentals Remain Favorable: Fundamentals in the broader agriculture space remain positive, given the sustained rise in food demand globally. While prices of corn, soybean and wheat have declined from the multi-year highs reached in 2022, they remain supportive. Farmer economics also remain attractive in most global growing regions on strong crop demand. Per the U.S. Department of Agriculture’s (USDA) latest outlook, net farm income is projected to climb 29.5% year over year to $180.1 billion this year, driven by a significant increase in government payments. USDA forecasts direct government payments at $42.4 billion in 2025, a 354.5% surge from 2024. Solid farm income is likely to drive farmers’ spending on crop nutrients this year. Expectations of high levels of planted corn and soybean acres globally also suggest a pickup in fertilizer demand.
Softer Fertilizer Prices to Weigh on Margins: Prices of phosphate and potash have retreated since the back half of 2022 from their peak levels attained in the first half, riding on the impacts of the Russia-Ukraine war and disruptions due to the sanctions in Belarus. Global nitrogen prices have also declined since the beginning of 2023. Higher global supply, driven by increased global operating rates due to lower global energy costs, has resulted in a decline in nitrogen prices. While fertilizer prices have stabilized somewhat, weaker year-over-year prices are likely to dent the profitability of companies in this space over the near term.
Zacks Industry Rank Reflects Upbeat Prospects
The Zacks Fertilizers industry is part of the broader Zacks Basic Materials sector. It carries a Zacks Industry Rank #39, which places it in the top 16% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates a bright near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms Sector & S&P 500
The Zacks Fertilizers industry has underperformed both the Zacks S&P 500 composite and the broader Zacks Basic Materials sector over the past year.
The industry has lost 1.1% over this period against the S&P 500’s rise of 23.3% and the broader sector’s increase of 0.7%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, which is a commonly used multiple for valuing fertilizer stocks, the industry is currently trading at 10.98X compared with the S&P 500’s 17.67X and the sector’s 11.51X.
In the past five years, the industry has traded as high as 21.88X and as low as 4.97X, with a median of 10.71X, as the chart below shows.
Enterprise Value/EBITDA (EV/EBITDA) Ratio
Enterprise Value/EBITDA (EV/EBITDA) Ratio
3 Fertilizer Stocks to Keep a Close Eye on
Nutrien: Canada-based Nutrien is a leading provider of crop inputs and services. The company is benefiting from higher demand for crop nutrients on strength in the global agriculture markets. It is seeing strong demand in its major markets, particularly North America. NTR is also gaining from acquisitions, cost efficiency and increased adoption of its digital platform. The company also continues to expand its footprint in Brazil through acquisitions. Lower natural gas costs are also acting in NTR’s favor.
Nutrien currently carries a Zacks Rank #2 (Buy). NTR has expected earnings growth of 5.9% for 2025. The Zacks Consensus Estimate for 2025 earnings has been revised 1.6% upward over the past 60 days. It also has an expected long-term earnings per share growth rate of 12%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: NTR
ICL Group: Israel-based ICL is engaged in the fertilizer and specialty chemical sectors. The company remains focused on growing its specialties businesses. Efforts to boost operating efficiency and productivity and the launch of new innovative solutions should support its results. The acquisition of Nitro 1000 also allows ICL to expand its market position and leadership in Brazil's specialty plant nutrition. The buyout of Custom Ag Formulators also expanded its global Growing Solutions business. The new food specialty plant in China will also strengthen relationships with existing customers while exploring new business opportunities in the country. Moreover, ICL's investment in Plantible Foods demonstrates its commitment to developing sustainable and innovative food-sector solutions.
ICL Group currently carries a Zacks Rank #2. It has expected earnings growth of 14.4% for 2025. ICL’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 18.1%, on average.
Price and Consensus: ICL
CF Industries: Illinois-based CF Industries is a leading global manufacturer of nitrogen and hydrogen products for fertilizer, clean energy, emissions reduction and other industrial applications. It is gaining from higher nitrogen fertilizer demand in the major markets. CF is seeing higher nitrogen demand for industrial uses in North America. Lower natural gas prices are also acting in the company’s favor. CF remains committed to boosting shareholders’ value by leveraging strong cash flows.
CF Industries currently carries a Zacks Rank #3 (Hold). It has a trailing four-quarter earnings surprise of roughly 10.3%, on average. CF also has an expected long-term earnings per share growth rate of 37%.
Price and Consensus: CF
