Fertilizer Etf: A Guide To Investing In Agriculture's Future

Exchange-traded funds (ETFs) are a convenient way to invest in sectors or niches that interest you. If you want to invest in the fertilizer industry, you can use the Global X Fertilizers/Potash ETF (SOIL) to invest in multiple fertilizer companies simultaneously.

Fertilizer ETFs invest in companies involved in the non-metallic mining industry, including those that produce nitrogen and phosphate. The expense ratio for the Global X Fertilizers/Potash ETF is 0.69%, which is lower than the typical stock mutual fund.

Some top fertilizer stocks to consider include Scotts Miracle-Gro Company (SMG), CF Industries (CF), Intrepid Potash (IPI), and Nutrien Ltd. It's important to carefully research and consider the risks before investing in any stock or ETF.

The basics of ETFs

Exchange-traded funds (ETFs) are a type of investment vehicle that pools a group of securities into a fund that can be traded like an individual stock on an exchange. ETFs can be structured to track anything from the price of a commodity to a large and diverse collection of securities. They can also be designed to track specific investment strategies.

ETFs are bought and sold through online brokers and traditional broker-dealers, or in a brokerage account. They are available on most online investing platforms, retirement account provider sites, and investing apps. ETFs typically have low expenses because they track an index, and most platforms offer commission-free trading.

ETFs offer several benefits, including lower expense ratios and broker commissions compared to buying individual stocks. They also provide risk management through diversification. However, it's important to consider the costs, dividends, and taxes associated with ETFs before investing.

There are different types of ETFs, including passive and actively managed ETFs, bond ETFs, stock ETFs, industry or sector ETFs, commodity ETFs, currency ETFs, Bitcoin ETFs, and inverse ETFs. Each type of ETF offers unique benefits and risks that investors should understand before investing.

Overall, ETFs provide a convenient way to invest in sectors or niches that interest investors, and they can be a great way to gain instant diversification across an industry or group of companies.

Top fertilizer stocks

When considering investing in the fertilizer industry, it's important to keep in mind that it is subject to fluctuating market and industry conditions. Here is a list of the top fertilizer stocks to consider:

Scotts Miracle-Gro Company (SMG)

Scotts Miracle-Gro Company manufactures, markets, and sells lawn, garden care, and indoor and hydroponic gardening products in the United States and internationally. It operates through three segments: U.S. Consumer, Hawthorne, and Other. The company has a trailing 12-month revenue of around USD 3.5 billion and employs 5,500 people. Its stock opened at $87.81 after a previous close of $86.74.

CF Industries (CF)

CF Industries manufactures and sells hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities in North America, Europe, and internationally. It operates through Ammonia, Granular Urea, UAN, AN, and Other segments. CF Industries has a trailing 12-month revenue of around USD 5.9 billion and employs 2,700 staff. Its stock opened the day at $83.42 after a previous close of $83.19.

Bunge Global SA

Bunge Global SA operates as an agribusiness and food company worldwide, purchasing, storing, transporting, processing, and selling agricultural commodities and commodity products. It operates through four segments: Agribusiness, Refined and Specialty Oils, Milling, and Sugar and Bioenergy. The company has a trailing 12-month revenue of around USD 55.8 billion and employs 23,000 staff. Its stock opened the day at $90.69 after a previous close of $89.78.

Intrepid Potash (IPI)

Intrepid Potash engages in the extraction and production of potash in the United States and internationally. It operates through three segments: Potash, Trio, and Oilfield Solutions. The company has a trailing 12-month revenue of around USD 203.7 million and employs 485 staff. Its stock opened the day at $24.57 after a previous close of $24.73.

Nutrien Ltd. (NTR)

Nutrien Ltd. provides crop inputs and services and operates through four segments: Retail, Potash, Nitrogen, and Phosphate. The company has a trailing 12-month revenue of around USD 25.8 billion and employs 25,900 staff. Its stock opened the day at $48.00 after a previous close of $47.89.

Archer Daniels Midland Company (ADM)

Archer Daniels Midland Company (ADM) procures, transports, and merchandises agricultural commodities and products such as fertilizers. It is based in Chicago, Illinois. The company has a five-year average forward P/E ratio of 13.6, but is currently trading at a P/E ratio of 11.7, indicating that it is undervalued. In the fourth quarter, ADM generated revenues of $26.2 billion, an increase of 13.6% year-over-year.

How to invest in fertilizer stocks

If you're interested in investing in the fertilizer industry, you can either buy individual stocks or invest in an Exchange-Traded Fund (ETF) that holds a basket of fertilizer stocks.

Investing in Fertilizer Stocks

To invest in individual fertilizer stocks, follow these steps:

• Choose an online stock trading platform that suits your needs. Consider factors such as fees, available investments, and research tools offered by the platform.
• Sign up for an account and provide your personal information.
• Set up a funding method by linking your bank account to deposit funds into your investment account.
• Research and choose the fertilizer stocks you want to buy. Look into companies like Scotts Miracle-Gro (SMG), CF Industries (CF), Intrepid Potash (IPI), and Nutrien Ltd.
• Place your order and buy the stock through your chosen trading platform.

Investing in Fertilizer ETFs

Alternatively, you can invest in a fertilizer ETF, such as the Global X Fertilizers/Potash ETF (SOIL). ETFs offer instant diversification and lower expense ratios compared to mutual funds. However, note that there may not always be fertilizer ETFs available in the market, and they carry the usual risks associated with investing.

When investing in fertilizer stocks or ETFs, it's important to remember that past performance does not guarantee future results. Carefully consider your investment goals, conduct thorough research, and understand the risks involved before making any investment decisions.

Fertilizer stocks and the market

Fertilizer stocks can be a good investment option, especially with the increasing global demand for food and crops. Fertilizer companies are expected to thrive as the world population grows, and this makes them an attractive investment option.

Exchange-traded funds (ETFs) are a convenient way to invest in the fertilizer industry. ETFs allow investors to invest in a variety of companies within the industry simultaneously, providing instant diversification. The Global X Fertilizers/Potash ETF (NYSE: SOIL) is an example of an ETF in this sector. This particular fund has a higher expense ratio of 0.69% compared to the typical ETF, but it is still lower than the average stock mutual fund.

When investing in individual fertilizer stocks, it is important to consider your portfolio and investment goals. For long-term investors, stocks with steadier gains over time may be more suitable, while day traders might prefer more volatile stocks.

Some of the top fertilizer stocks to consider include:

• Scotts Miracle-Gro Company (SMG): This company manufactures, markets, and sells lawn, garden care, and indoor and hydroponic gardening products. It has a market capitalization of $4,969,005,056 and is listed on the NYSE.
• CF Industries (CF): CF Industries manufactures and sells hydrogen and nitrogen products for energy, fertilizer, and industrial activities. It has a market capitalization of $15,013,886,976 and is also listed on the NYSE.
• Bunge Global SA: Bunge operates as an agribusiness and food company, purchasing, storing, transporting, processing, and selling agricultural commodities. It has a market capitalization of $12,659,360,768 and is listed on the NYSE.
• Intrepid Potash (IPI): Intrepid Potash engages in the extraction and production of potash and has subsidiaries worldwide. It has a market capitalization of $327,918,656 and is listed on the NYSE.
• Nutrien Ltd.: Nutrien provides crop inputs and services and operates through four segments: Retail, Potash, Nitrogen, and Phosphate. It has a market capitalization of $23,670,894,592 and is listed on the NYSE.

It is important to remember that, like any investment, fertilizer stocks come with risks. The market and the plant food industry are subject to fluctuating conditions, so it is crucial to carefully research and vet your investment picks before committing.

Fertilizer stocks as a hedge against inflation

Fertilizer stocks are an effective hedge against inflation. This is because they are tied to the agriculture industry, which is sensitive to inflation. When inflation occurs, prices rise, and this includes food prices. As a result, farmers tend to increase their crop output to meet the demand for food, and this, in turn, increases the demand for fertilizers.

Fertilizer companies ultimately profit from buoyant N-P-K (nitrogen, phosphate, and potash) prices, and rising nutrient prices are determined by three key variables:

• Rising crop prices (and thus rising fertilizer demand)
• Input costs (e.g. natural gas prices)
• Currency factors (e.g. inflation)

Fertilizer stocks are also a good hedge against inflation because they are linked to commodities. Commodities have demonstrated strong resilience in the face of inflation and have been a critical hedge for bonds and equities when prices and wages are climbing.

A good way to invest in the fertilizer industry is through exchange-traded funds (ETFs). The Global X Fertilizers/Potash ETF (NYSE: SOIL) is an example of an ETF that focuses on the fertilizer industry. This ETF invests in several fertilizer companies, including Terra Nitrogen (NYSE: TNH), Agrium (NYSE: AGU), Potash of Saskatchewan (NYSE: POT), and Mosaic (NYSE: MOS).

It is worth noting that fertilizer producers are not the most glamorous option for your portfolio. They are often overlooked by investors despite offering some attractive opportunities for those looking to hedge against inflation.

• CF Industries (CF): CF Industries is the world's leading producer of anhydrous ammonia, a widely used fertilizer. The company is benefiting from soaring nitrogen prices and expects positive industry fundamentals to persist for a long time, driven by the need to replenish global grain stocks.
• Sociedad Química y Minera de Chile S.A. (SQM): SQM is a Chilean supplier of iodine and one of the world's largest lithium producers. While SQM is diversified beyond fertilizers, it also produces potash and potassium nitrate, with its fertilizer business comprising 33% of total gross profits. With fertilizer prices soaring and supplies for the three main crop nutrients expected to be scarce in the coming months, SQM is well-positioned to benefit.
• ICL Group (ICL): ICL Group is an Israeli-based company and one of the world's largest producers of potash, phosphate, and specialty fertilizers. The company uses a unique evaporation process to extract potash and other minerals from the Dead Sea. ICL's revenue increased 38% in 2021, and net income improved substantially, rising 219%. Analysts project sales to increase 25% in 2022, with earnings forecast to leap 53%.

In conclusion, fertilizer stocks can be a great addition to your portfolio to hedge against inflation. They offer exposure to a vital industry that is often overlooked by investors. By investing in fertilizer stocks, you can benefit from the increasing demand for food and the resulting rise in fertilizer prices.

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