In 2020, about one in ten people in the world were undernourished.
Canada is among the safest countries when it comes to food security. It’s almost self-reliant and mainly imports processed foods from the US.
Canada might be safe, but global food scarcity is a growing problem.
Key players in the food supply chain, like fertilizer companies, may benefit from this situation, so investing in the best fertilizer stocks in Canada now might be a good long-term strategy.
The first thing you need to know about Canada is that it’s not among the top food producers in the world. The top four agricultural producers are among the most populated countries in the world.
Since Canada is currently only supporting a population of 38 million, agricultural production is not on par with more populated countries.
But Canada is also among the largest agri-food exporters in the world, and crops make up a significant portion of these exports.
So the local fertilizer industry is significant for a country with a population of about 38 million, but there is only one giant, i.e., the only large-cap fertilizer stock in Canada. Most other fertilizer stocks are mid- to nano-cap.
Economic Factors Influencing Fertilizer Stocks
Canada, being one of the largest exporters of agri-food, has its fertilizer industry largely influenced by global economic factors. Let’s delve into some of the economic aspects affecting the sector:
- Global Food Demand: With the rising global population, the demand for food is escalating. The higher demand for crops places a burden on soil resources. This in turn boosts the demand for fertilizers to replenish soil nutrients and maximize yield.
- Trade Policies: The tariffs and trade agreements between Canada and its trading partners, especially the US, influence the fertilizer market. For instance, a favourable trade agreement can lead to higher exports and a boom in fertilizer stocks.
- Research and Development: Economies investing in agricultural research and development indirectly foster growth in the fertilizer sector. A breakthrough in fertilizer efficiency or a newly discovered usage can surge the demand.
- Currency Fluctuations: The Canadian dollar’s strength compared to other major currencies affects the price competitiveness of Canadian fertilizer exports. A weaker CAD can make Canadian fertilizers cheaper for foreign buyers, thereby increasing demand.
- Global Economic Health: A robust global economy can boost the purchasing power of developing nations, leading to increased demand for agricultural products and, by extension, fertilizers.
Best Fertilizer Stocks In Canada
A fertilizer is any natural or chemical substance that improves the yield of a crop. This usually refers to substances added directly to the soil, but we’ve followed the broader definition – anything that improves crop yield to meet the criteria of a fertilizer stock.
- Nutrien Stock (NTR.TO)
- Verde Agritech Stock (NPK.TO)
- Itafos Stock (IFOS.V)
- MustGrow Biologics Stock (MGRO.V)
- Bee Vectoring Technologies International Stock (BEVVF)
- Karnalyte Resources Stock (KRN.TO)
- CO2 GRO Stock (GROW.V)
- Earth Alive Clean Technologies Stock (EAC.V)
- CF Industries Stock (CF)
- Mosaic Stock (MOS)
- Intrepid Potash Stock (IPI)
1. Nutrien Stock
- Ticker: NTR.TO
- Industry Niche: Potash mining and production
- Forward Dividend Yield: 3.56%
- Dividend Payout Ratio: 27.98%
- Dividend Yield (12-Month Trailing): 2.72%
- Upcoming Dividend Date: Jan 12, 2024
- Market Cap: $37.72 Billion
- Forward P/E Ratio: 11.12
Nutrien is one of the four largest potash-producing companies worldwide and is currently in the top spot.
With six mining networks and over 300 distribution points, the company delivers the potash necessary to feed millions of people around the globe.
Potash is almost exclusively used for making fertilizer (about 95% of the global supply), and Canada is the largest potash producer in the world. Saskatchewan, where Nutrien operates, is home to the richest potash deposits in the world.
With a near monopoly on one of the most vital fertilizer raw materials, Nutrien is a clear leader in the fertilizer industry and one of the best fertilizer stocks in Canada.
This competitive advantage will most likely reflect in the stock’s performance in the long run. It’s also a decent dividend stock.
2. Verde Agritech Stock
Verde also focuses on mining potash and preparing multi-nutrient mineral fertilizer, though it operates primarily in Brazil.
The proven and probable reserves from its Brazilian potash operation are pretty promising.
It has two major fertilizer brands in its portfolio and is also working on developing a fertilizer with microorganisms, which is expected to be the next major step in increasing crop productivity and a significant improvement over traditional fertilizer.
The most significant growth phase the stock has gone through lately was between Mar 2020 and Apr 2021 when it rose over 4,300%.
If the company introduces the microorganism-based fertilizer and it shows promising results in the real-world implementation setting without costing significantly higher than other fertilizer options, the company may see exceptional growth in the years ahead.
3. Itafos Stock
Like potassium (from potash), phosphorus is a vital fertilizer ingredient that facilitates seed and root growth. And the US-based Itafos is a phosphorus-focused fertilizer company.
Four of its five main projects focus on phosphorus mining and fertilizer production and are located in the US, Brazil, and Guinea-Bissau.
The geographic diversification of its assets is a major plus for the company. It also gives it access to different markets (that can ship directly).
The company used to be significantly more extensive, and the stock used to trade in the early three digits, but now it’s down to a single-digit price tag, but being a penny stock has its perks.
The stock has spiked multiple times in the last five years alone, and the most significant growth in that period was between Dec 2020 and Apr 2022, which pushed the stock up 1,400%.
If you buy the dip and the stock keeps performing the same way, you can expect market-beating returns in relatively shorter time frames.
4. MustGrow Biologics Stock
MustGrow Biologics is not a fertilizer stock per se, but where fertilizers grow the yield of a crop by enriching the soil, pesticides and herbicides enhance the yield by killing the elements that spoil part of the crops – pests and invasive plant species.
What the company offers is different from most standard pesticides and herbicides that farmers use, as it’s purely organic and is made from mustard seeds.
And one element of the fertilizer that it possesses is its ability to enhance the health of the soil.
The stock only started trading on the Canadian Securities Exchange in 2019, and so far, the stock has only gone up.
From inception to its peak, the stock rose over 1,300% in less than three years (between Jul 2019 and Oct 2021). The growing demand for organic food around the globe is the perfect environment for this stock to thrive.
The four Canadian fertilizer stocks listed below are all nano-cap.
5. Bee Vectoring Technologies International Stock
Bee Vectoring Technologies offers a unique way to increase the yield of crops through pest and disease management. It focuses on growing the yield with commercially reared bees.
These bees pollinate the crops and transport the active ingredients the company has developed from trays to the plants the same way they would transport pollen.
This increases the yield of certain crops substantially, like 29% to 44% for strawberries and about 15% to 40% for blueberries and cranberries.
It’s a unique solution, but it only targets certain crops and might have other prerequisites, like weather conditions. The stock has offered cyclical growth so far, but not on the same scale as other penny stocks on this list.
6. Karnalyte Resources Stock
The Saskatoon-based Karnalyte Resources is another fertilizer stock that has seen much better days.
The company has an interest in a few potentially high-yielding mineral reserves that it’s developing for potash production.
Once fully functional (with all the phases completed), the company may produce over 2.1 million tonnes of potash annually.
7. CO2 GRO Stock
The plants are much keener on “breathing in” carbon dioxide than we humans are, which is one of the reasons why they are so crucial to the environment.
The company, CO2 GRO leverages this phenomenon and creates an aqueous Carbon Dioxide microfilm on the leaves of the plants (in a greenhouse) and facilitates micro-dosing of nutrients. This boosts the yields up to about 30%.
The stock behaves like most other penny stocks and has gone through multiple growth phases in the last ten years.
8. Earth Alive Clean Technologies Stock
Earth Alive is another company focused on improving the yield of crops and improving the productivity and nutritional value of the soil by introducing suitable soil “activators.”
The company is working on other products as well, all targeted toward the agricultural sector. It’s more than just a typical fertilizer stock and may experience explosive growth if any of its underlying divisions start gaining good traction.
American Fertilizer Stocks
In addition to these best fertilizer stocks in Canada, there are US stocks that you may consider investing in:
9. CF Industries Stock
- Ticker: CF
- Industry Niche: Ammonia production
- Forward Dividend Yield: 1.93%
- Dividend Payout Ratio: 13.17%
- Dividend Yield (12-Month Trailing): 2.09%
- Upcoming Dividend Date: Nov 30, 2023
- Market Cap: $14.97 Billion
- Forward P/E Ratio: 11.57
CF Industries is one of the largest ammonia producers in the world. It also produces urea (ammonia-based).
Even though the fertilizer industry has been the primary target market for the company, it’s now pivoting to producing green and blue ammonia to meet the world’s sustainability needs, as it can also be used as fuel.
With two robust target markets at its disposal, CF Industries’ outlook seems quite promising.
10. Mosaic Stock
- Ticker: MOS
- Industry Niche: Phosphate and potash production
- Forward Dividend Yield: 2.38%
- Dividend Payout Ratio: 10.94%
- Dividend Yield (12-Month Trailing): 2.22%
- Upcoming Dividend Date: Dec 21, 2023
- Market Cap: $11.90 Billion
- Forward P/E Ratio: 10.93
Unlike most other fertilizer stocks on this list that usually only focus on one key fertilizer ingredient, Mosaic focuses on two: phosphate and potash.
It has operations in both North and South America and multiple phosphate and potash assets, which are also quite conveniently located from a supply chain perspective.
It has a massive production capacity of about 25 million tonnes of the two materials and caters to farmers in 40 countries.
Mosaic has an impressive presence, and by covering two out of three major fertilizer components, the company has established itself as a key player in the fertilizer industry.
11. Intrepid Potash Stock
Intrepid Potash, as the name suggests, is a major potash producer in the US, though it’s not the only product in its portfolio. It also produces Trio, which comes with a unique mineral blend that’s ideal for fruit and vegetable crops. It also produces salt and chemicals for the oil and gas industry.
The diversified business and different target markets make Intrepid an intelligent pick, as it’s more than just a typical fertilizer stock.
Does Canada Make Its Own Fertilizer?
Yes. The country produces most of the fertilizer it needs domestically and exports a lot of it to countries like the US. But Canada also imports fertilizers (when the tariffs are favourable) from multiple countries, including Russia.
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The world population is rising too rapidly for the world’s food supply to keep pace and new and powerful fertilizers are one of the few hopes the world has left to grow enough food for its population.
So the best fertilizer stocks in Canada should not just be considered for what they are doing now but what they can do in the future.
Fertilizer companies that can provide solutions for food shortages and diminishing yields may experience unprecedented growth in the future.
The one thing more important than food is water, and if that’s the asset you want to bet on (like Micheal Burry did), these best water stocks in Canada should be on your radar.