Insights

Nutrien Ltd. (NTR, TSE)

  • After buying NTR in early March as it moved into our relative strength buy zone, the stock had a somewhat frustrating sideways move.
  • It also lost Relative Strength against the S&P500 enough that it fell out of our buy zone.
  • However, there were a few points that told us to hang on to NTR, both technical and fundamental.
    • First, NTR was still holding support, or at least toying with the 65 EMA (solid red line)
    • Second, as NTR was doing that, fighting with the 65 EMA, it made a slightly lower low in late April. At that time however, it had demonstrated a clear positive momentum divergence as you can see the RSI (top pane) making a higher low.
    • Third, fundamentally there is likely not a better sector to be in given global supply/demand characteristics of the agriculture sector.
    • Finally, while our system is clearly defined by selling stocks as they drop out of the top 25% relative performance range, experience (and Dorsey Wright & Associates in 2010) shows you that sometimes, when markets are as choppy and rotational as this one has been, you need to widen your lens a bit. Given that, and while the first two points held, we had to hold on to NTR.
  • We aren’t celebrating yet, and I expect the broader market will probably continue correcting here, but NTR is in the driver seat for now.
  • Nutrien (NTR) came out with quarterly earnings of $0.29 per share, beating the Consensus Estimate of $0.09 per share. This quarterly report represents an earnings surprise of 222.22%. Over the last four quarters, the company has surpassed consensus EPS estimates four times.
  • Nutrien competitor Mosaic (MOS) earnings report shed light on what is going on in the Potash/Fertilizer sector. MOS Gross Margins were up 10X from last year due to price increases. Their Gross Margin was 19%, the highest since 2015. Commodity cycle continues.
  • The sustainability of NTR’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call, but the fundamental trends are in place for higher levels this year.

 

 

 

 

 

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