Mosaic (NYSE:MOS) continues to sizzle — up over 15% and doubling the S&P 500’s performance since my last update. For those who don’t know the company, it is the world’s leading producer of concentrated phosphate and potash. In other words, it is a crop nutrition company whose goal is to help the world’s increasing population grow the food it needs. In fact, MOS is recognized as an innovator in its field.
It made a monster move in the second quarter — up 17% between April 3 and July 3. That trend has continued through the third quarter, and I don’t expect the stock to fizzle out anytime soon. It’s moving so much that it’s not keeping up with the value proposition as the underlying fundamentals continue to outpace the share price.
However, the Street can’t keep up either, and continues to hike its consensus earnings estimate for the next fiscal year. It now stands at $2.17, up from $2.09 a share last week and $1.91 a share a couple of months earlier.
Global Demand is Catching Fire, Helping Mosaic Stock
From a macro perspective, global demand for fertilizer is catching up and could soon pass capacity, giving the company pricing power not seen in some time.
As for the company itself, selling, general and administrative (SGA) costs and long-term debt are declining and margins are expanding. Management’s five-year outlook shows significant shipment increases.
On a technical level, the stock is breaking a key resistance point and only has to clear its Feb. 23, 2017 high of $33.60 to pick up even more upside momentum.
Looking forward, I think MOS has the potential to hit $40 or go even higher over the next 12 months, and I’m very excited to see what comes out when the company reports earnings on Nov. 6. I’ll be sure to cover the numbers when I share my next update.
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