The second quarter ended back around where it started in the overall market, but my Best Stocks for 2018 contest pick, Mosaic Co (NYSE:MOS), did a heck of a lot better.
A quick refresher: Mosaic is the world’s leading producer of concentrated phosphate and potash. In simpler 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.
After a tough first quarter, the stock has made a monster move — up 17% since I last updated you on April 3 and 9.3% year-to-date. As a matter of fact, on June 14 it hit a new 52-week high of $29.95. This doesn’t surprise me, as the fundamentals still look really good here.
On May 5, MOS reported first-quarter earnings of 20 cents per share, up from $0.04 per share last year but below estimates for $0.24. Revenue grew nearly 19% to $1.9 billion and was roughly in line with estimates. Full-year earnings guidance was strong, coming in at $1.20-$1.60 per share — up from previous guidance of $1-$1.50 per share — and above Wall Street’s consensus of $1.47 per share.
Significant Upside Room
For the next quarter, analysts are calling for earnings of 39 cents per share on a 34.5% jump in revenue to $2.36 billion. Overall, the company has a good history of beating estimates, so I don’t expect the upcoming results to disappoint, especially since phosphate and potash prices are rebounding and continue to have significant upside driven by large demand. I see shipments and pricing power improving, and I also look for cost controls, including lower SG&A expenses.
On the technical side, the chart is very attractive. When we last spoke, the stock had fallen below its 50-day moving average (the blue line) and was attempting to hold its 200-day average (the red line). It did, and the bounce off that that level is what led to MOS stock’s big rebound.
MOS was able to recapture its 50-day average in mid-April and officially confirmed it as support in early May. It went on to print a series of higher highs and higher lows, and even though it has dipped back in the recent market volatility I like that the 50-day continues to act as an additional level of strong support. With solid fundamentals and technicals still in play, I continue to see MOS breaking through current resistance near $30. From there, it has potential up toward $33 and possibly beyond.
Curious what Wall Street insider Charles Payne really thinks? Get more behind-the-scenes insights, valuable market research and hands-on guidance including live stock recommendations. Charles Payne’s Smart Talk is absolutely FREE for a limited-time only. Sign up today!
Legendary Investor Louis Navellier’s Trading Breakthrough
Discovered almost by accident, Louis Navellier’s incredible trading breakthrough has delivered 148 double- and triple-digit winners over the past 5 years — including a stunning 487% win in just 10 months.
Learn to use this formula and you can start turning every $10,000 invested into as much as $58,700.
Click here to review Louis’ urgent presentation.
