Highlishts

• Mosaic shows a high rate of revenue growth by 42.34% in 2021, compared with 2020.
• The skyrocket of fertilizer prices creates a positive macroeconomic environment for Mosaic’s profit in 2022.
• The Piotroski F-Score and price ratios provide a positive outlook for MOS’s stocks.

Overview

The Mosaic Company was founded in 2004, through the combination of IMC Global Inc. and Cargill Incorporated. It is headquartered in Tampa, Florida. MOS is the world’s leading integrated producer of concentrated phosphate and potash, two of the three most important nutrients in agriculture. The company employs 12,525 workers in seven countries to serve farmers all over the world. MOS’s aim is to maximize efficiencies and minimize the environmental footprint.

MOS offers a range of performance products designed to provide superior nutrition for optimal growth and greater ROI. These performance fertilizers ensure not just the right balance of nutrients, but the right material consistency to give growers an efficient application experience and optimum nutrient distribution for increased yields. MOS also offers commodity fertilizers that provide an excellent source of crop nutrition, whether being used to supplement their performance products or as a primary fertilizer.

MOS’s stock has increased by 28.54% since February 23^rd, 2022. There are two reasons for the stock skyrocket: firstly, the financial report for the 2021 financial year which was published on February 23^rd, 2022; secondly, the war in Ukraine and the sanctions against Russia.

Mosaic’s revenue has significantly increased by 42.34% with a gross margin of 25.90% in 2021. Moreover, the revenue growth for the 4^th financial quarter was equal to 12.36%. At the same time, the net income and the net margins were $1630.6 mln and 13.20% in 2021, respectively, compared with the net income and the net margins that were $8681.7 mln and 7.67% in 2020. However, the main factor of the revenue growth was the price factor, not the production volume. Brazil and the USA took most of the revenue in 2021 (40.48%) with $5002.2 mln and $3929.3 mln (31.80%) respectively. Also, Canpotex, Canada, China, and India took $1089.6 mln (8.82%), $794.9 mln (6.43%), $396 mln (3.20%), and $340.3 mln (2.75%) in the total return. The positive factor for the stock growth became the announcement to repurchase $400 million of Mosaic’s common stock.

The current geopolitical situation in Ukraine and sanctions against Russia is the main factor of the stock growth today. According to Bloomberg, fertilizer prices continue to surge as supply upheaval from low-cost exporter Russia leaves governments struggling to secure crop nutrients. Brazil, a major agriculture exporter, imports 85% of its fertilizer consumption, with Russia as its main supplier, and depends on exports for at least 90% of its nitrogen and potash; it wants to exclude crop nutrients from any sanctions imposed on Russia. Moreover, before Russia invaded Ukraine, sanctions against Belarus had a negative impact on potash supply. Belarus, which exports about 15% of the world’s potash, is blocked from doing so because of its immigration fight with the European Union.

Let us look at MOS performance across the Agriculture Industry. According to GuruFocus, MOS’s ROE of 16.12 is better than 67.11% of 228 companies in the Agriculture industry. The Operating Margin of 21.26% is higher than 85.15% of 229 companies in the industry.

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Let’s look at the next comparable companies: SQM, CF, FMC, ICL, CTVA. Currently, all MOS’s price ratios are lower than Average and Median values. Moreover, the current P/E ratio looks reasonable with taking into account the current prices in the commodity market and the average P/E value across comparable companies create a good base for future stock price growth.

The Altman Z-score, which determines the result of a credit test, stays on the border of the Grey and the Safe zones. At the same time, MOS looks interesting in terms of Piotroski F-Score. Piotroski F-score is a number between 0 and 9 that is used to assess the soundness of a company’s financial position. A score of 8 may indicate that the company’s stock is undervalued and can be interpreted by investors as a good signal to buy the stock.

Conclusion

The factor of price is the main factor of MOS’s revenue growth in 2021, and the current price surge in the fertilized market will have a positive impact on the company’s income. Brazil wants to exclude crop nutrients from any sanctions imposed on Russia, and MOS can increase its supply to Brazil taking into consideration that Brazil is the main MOS buyer. Moreover, MOS looks promising in the context of Piotroski F-Score and price ratios. MOS is a good stock to buy in the current macroeconomic environment which can reach $70.

It is worth paying attention to the fact that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the MOS stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success with MOS Stock Forecast

I Know First has been bullish on the MOS stock forecast in the past. On March 12^th, 2021 the I Know First algorithm issued a forecast for MOS stock price and recommended MOS as one of the best chemical stocks to buy. The AI-driven MOS stock prediction was successful on a 1-year time horizon resulting in more than 85.11%.

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