Buy Alert: Mosaic (MOS)

Strategic Investor
ALERT
February 28, 2022
Buy Alert: Mosaic (MOS)

Dear Reader,

Our next issue is due out this Wednesday, but sometimes we need to be nimble. So we’re sending out our next pick two days early.

Action to Take: BUY shares of Mosaic (MOS) up to $65. We’ll hold shares with a 40% trailing stop loss. We’ll track shares in our America’s Great Wealth Transfer category.

Inflation is hitting 40-year highs with no signs of slowing down. That means prices for the things we need every day are heading higher.

We’re already playing the inflation trend with portfolio companies Gladstone Land (LAND) and Farmland Partners (FPI). Adding shares of Mosaic today is another way to play that trend.

Mosaic makes fertilizer. It’s one of the largest producers of phosphate- and potash-based fertilizers in the world.

The company’s total market share is about 15% of world phosphate production and 10% of world potash production.

Last year, Mosaic did $12.4 billion in total revenue. That’s a 42% growth over 2020.

But more importantly, the company’s profit margins are expanding.

  Last 5 Years Average 2021
Gross Margin 12.30% 26%
EBITDA Margin 17.20% 28.50%
Net Margin 4.30% 14.90%

That’s because prices for fertilizer are close to all-time highs. Part of that has to do with the supply chain. Another part is because of geopolitics.

Now, we’re not geopolitical experts. But with the conflict in Ukraine continuing, we see even more disruptions ahead for the fertilizer market. That’s because Russia is the second-largest potash producer in the world and together with China, makes up about 45% of the phosphate market.

In any case, it seems that the rest of the world will need to lean heavily on other players like Mosaic. That should be bullish for the company’s shares.

We’ll have more details in the issue, due out Wednesday, March 2 at 5 p.m. ET. But as we said above, sometimes we need to be flexible in a fast-paced market environment.

Keep walking the path,

[signature]

David Forest
Editor, Strategic Investor

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