Some investors will try to create the perfect mix of indicators on a chart to lead them to the right moment to buy or sell a stock or a financial product. The problem is that if everyone is watching the same indicators and looking for the same patterns and setups, wouldn’t that render the validity of a strategy worthless? In fact, all indicators are based on one thing and one thing only: Price action.
When watched diligently, price action can lead traders to the market’s sentiment toward groups of stocks as a whole, where the rest of the homework becomes relatively more straightforward afterward. Ever since the U.S. presidential election, price action has been led by the agriculture sector—specifically, fertilizers and the chemical companies that support these products and their rising demand.
This is where names like FMC Co. (NYSE: FMC), The Mosaic Co. (NYSE: MOS), and Nutrien Ltd. (NYSE: NTR) come into play to offer investors new upside potential.
FMC: Wall Street Targets Double-Digit Gains
Even after rallying by nearly 6% over the past week, FMC stock still has a significant way to go if it wants to regain the 52-week highs made previously. Currently trading at 85% of that peak, the stock's recent movement has provided Wall Street analysts with a clearer basis for assessing its fair value.
An agricultural sciences company, FMC focuses on developing innovative and sustainable crop protection technologies. Their product portfolio includes insecticides, herbicides, and fungicides designed to enhance crop yield and quality. FMC is committed to advancing precision agriculture technologies and sustainable farming practices.
Royal Bank of Canada recently reiterated its Outperform rating on FMC stock, valuing shares closer to $81. To prove this new price target right, FMC stock would need to move higher by as much as 38% from where it is trading on November 25. This target calls for a new 52-week high in FMC, which stands out from the pack in terms of perceived upside, something analysts very rarely provide. The reasoning behind this view is that as the Federal Reserve (the Fed) cuts interest rates, business activity will pick up, and that includes consumer spending and consumption of goods like food.
Knowing that FMC is in the middle of producing more crops to satisfy this potential demand, Wall Street feels comfortable projecting up to 90 cents in earnings per share (EPS) for FMC over the next 12 months, representing just under 50% growth from its reported 69-cent level as of its fiscal quarter ending in September 2024.
Faced with these themes, some institutional buyers couldn’t help but get involved in FMC's action. State Street boosted their FMC holdings by 27.3% as of November 2024, netting their positions at a high of $417.1 million today, or 5% ownership in the company.
Mosaic: Markets Spot Discounts
Investors need to keep one thing in mind during this dynamic and price action: any and all discounts present in the market will be closed down by the right agents. This time around, these agents are institutions and analysts.
As Mosaic stock trades down to 68% of its 52-week high, a level so low that it has opened the company up to trading at a price-to-book (P/B) ratio as well, a few metrics have started to show that this level is one that a few in the market don’t want to miss.
As one of the world's leading crop nutrition companies, Mosaic specializes in the production of potash and phosphate fertilizers, which are essential nutrients for plant growth. Their mission is to help the world grow the food it needs by providing high-quality crop nutrition products
With an analyst consensus price target of $33.2 a share, investors face a net upside potential of as much as 27.6% from where the stock is trading on November 25. However bullish this might seem today, these analysts aren’t the only ones betting on the future of Mosaic stock.
Allocators at Geode Capital Management decided to increase their holdings in Mosaic stock by over 2% in this month. After this recent move, the company owns $228 million worth of stock for 2.6% ownership as a bullish vote of confidence.
Nutrien: Why Shareholders Are Positioned for Success
If the business activity uptick scenario ends up making its way to the United States economy, then inflation might start to become an issue once again. And if that happens, professional money managers will have to look for stocks with inflation-beating dividend yields and the potential for market-beating upside.
Lucky for them, Nutrien stock brings both. Offering shareholders a payout of $2.16 a share would translate into an annualized dividend yield of up to 4.6%, beating inflation and most other dividend stocks in the sector.
Nutrien is a major fertilizer manufacturer, producing and supplying potash, nitrogen, phosphate, and ammonium sulfate fertilizers. Beyond fertilizers, Nutrien offers agricultural solutions, including crop protection products, seed solutions, and digital tools for crop growers. The company also provides retail services such as field advisory and crop consulting to support farmers globally
Analysts at TD Securities rate NTR a Buy with a price target of up to $61, calling for a net upside of 30% from where the stock trades on November 25. Successfully looking to beat the market and inflation is another great way for investors to ride the agricultural wave.
