Time To Take A Chance On The Fertilizer Stocks?

Welcome to Episode #46 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Jeremy Mullin, editor of Zacks Counterstrike portfolio service.

Tracey and Jeremy have covered commodities and commodity stocks several times on the Market Edge but this week they cover one of the most beaten down areas in the commodity sector: the fertilizer stocks.

Remember those stocks? Investors have abandoned this industry over the last several years as the prices of the fertilizers have plunged. Combined with the downturn in farming, and with farming incomes, and it has been a tough couple of years for this industry.

But is there some hope heading into the second half of 2016 and into 2017?

And are the stocks now undervalued?

Tracey and Jeremy take a look at the big, pure fertilizer plays in the United States and Canada.

Outlook for the Industry Giants

1. CF Industries (CF): Nitrogen producer. Earnings will be down 66% in 2016.

2. Mosaic (MOS): World’s largest supplier of phosphates and potash. Earnings expected to plunge 81% this year.

3. Potash (POT): Large potash producer. Earnings forecast to decline 63% in 2016.

All three companies pay a dividend and the yields are high.

Tracey and Jeremy discuss how “safe” these dividends are and talk about which company has already cut its dividend not just once, but twice.

Additionally, the agribusiness companies, such as Agrium (AGU) and The Andersons (ANDE) which also produce fertilizers, are also feeling the pain.

But does their diverse business model help them to ride out the storm?

Fertilizers used to be Wall Street darlings. Tune in to this week’s podcast to find out if they can get back to that place again.

And if you’d like to know how to play other commodities, Jeremy and Tracey took on the gold rally recently.

Should you invest in the yellow metal? Watch Below:

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.