NTR

Publicly traded companies mentioned herein: Arab Potash (APOT JR), Mosaic Co (MOS), Nutrien Ltd (NTR), Sociedad Quimica y Minera de Chile SA (SQM), Tesla Inc (TSLA)

Highlights

Nutrien (NTR) began trading on January 2, 2018, following the completion of the Potash/Agrium merger. The presenter is long at this time, seeing a favorable risk/ reward with the stock at ~$50 per share and the potential for a 50% to 100% gain over 12 - 24 months. Investors have “left most of the fertilizer companies for dead” following a five year period of dramatic underperformance relative to the market due to weak commodity prices (NTR is “incredibly sensitive” to phosphate, nitrogen, and potash prices). However, the company is deploying capital in the form of a healthy dividend and buyback program, must sell its substantial holdings of SQM and APC, and stands to benefit from $500MM+ in estimated cost synergies, as well as tight supply/ demand dynamics. If his thesis is correct, and NTR is at the bottom of the cycle with macro tailwinds, its EBITDA and FCF could potentially rise to $6.5B - $7B and $7.50 per share, respectively, over the next two years. This would be up from an expected $3.5B - $4B and $3 per share for 2018, and assumes a return to the average nutrient prices seen over the last eight years.