Performances of fertilizer stocks
So far in this series, we’ve had a comprehensive overview of the agricultural fertilizer industry. In this final part of our series, we’ll see how some fertilizer stocks have performed on a CAGR (compound annual growth rate) basis.
If you’ve invested in any of the agricultural fertilizer companies in the above graph, you’ve failed to beat the S&P 500 (SPY). SPY had a CAGR of 10.3% over the past seven years. CF Industries (CF) has come the closest with a CAGR of 9.0%. Agrium has also returned a healthy 7.0% on a CAGR basis, and Terra Nitrogen (TNH) has had a flat return.
But not all were winners. Intrepid Potash (IPI) had the worst performance over the past seven years with an annualized return of -32.0%. PotashCorp (POT) had an annual return of -10.0% over that period, and Mosaic (MOS) returned -9.0%. So investing in these companies would have eroded your wealth over the past seven years.
Needless to say, the past seven years saw these companies experiencing bumper years followed by the bottom cycle in the industry. Fertilizer companies (MXI) have even announced mergers and acquisitions to fuel growth.
For the 2016–2017 season, fertilizer prices remain low. Only an uptick in price will bring momentum to these stocks.