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Agrium - My Pick In The Fertilizer Sector

Summary

Agrium Inc. is the second largest fertilizer company, with a diversified operating in both retail and wholesale space.

The company has a more balanced approach, and has products targeting three main types of fertilizers - Nitrogen, Phosphate and Potash.

Agrium has raised dividends rapidly for 4 years in a row, with its 3-year dividend CAGR at 121.2%!

Agrium Inc. (NYSE:AGU) is a fertilizer giant that produces, markets, and distributes crop nutrients, crop protection products, seeds, and merchandise. The company operates in two segments: Retail and Wholesale. Agrium has a more diversified approach to the fertilizer industry, and offers products targeting the three main types - Nitrogen, Phosphate and Potash.

Agrium is the second largest fertilizer company, and its peer group includes Potash Corp. of Saskatchewan (NYSE:POT), Mosaic Co., CF Industries (NYSE:CF), Israel Chemicals (NYSE:ICL), Sociedad Quimica y Minera de Chile (NYSE:SQM), Intrepid Potash Inc. (NYSE:IPI), etc.

Corporate Profile (from Yahoo Finance)

Agrium Inc. produces, markets, and distributes crop nutrients, crop protection products, seeds, and merchandise products primarily in the United States, Canada, South America, Europe, and Australia, and internationally. It operates in two segments, Retail and Wholesale. The Retail segment supplies the crop nutrients, including dry and liquid nitrogen and phosphates, potash, sulfur, and micronutrients; crop protection products, such as herbicides, fungicides, insecticides, and adjuvant products; and merchandise products comprising fencing, feed supplements, livestock-related animal health products, irrigation equipment, and other products, as well as provides seeds and seed-related information. This segment provides nutritionals and crop protection product offerings under Loveland Products brand name; seed products under the Dyna-Gro and Proven brand names; and animal health products under the Dalgety brand name. This segment also offers product application, soil and leaf testing, crop scouting, tissue and soil sampling services, seed treatment, livestock marketing, insurance and real estate services, as well as provides precision agriculture services, such as yield data mapping, record-keeping, soil fertility management, variable-rate fertilizer application, and variable-rate seeding recommendations, as well as agronomic advice and proprietary product considerations. The Wholesale segment produces, markets, and distributes nitrogen, potash, and phosphate based crop nutrients to agricultural and industrial customers. This segment's products include ammonia, urea, urea ammonium nitrate solutions, ammonium nitrate, monoammonium phosphate, superphosphoric acid products, and muriate of potash. The company was formerly known as Cominco Fertilizers Ltd. and changed its name to Agrium Inc. in 1995. Agrium Inc. was founded in 1931 and is headquartered in Calgary, Canada.

The Case for Investing in Fertilizer Companies

The fertilizer industry provides an excellent opportunity for investors looking to benefit from large global macro-level trends. The world population continues to grow, and with that comes the added stress on resources such as arable land, water table, pests and land overuse. In order to keep up with the demand of feeding the world, farmers have had to resort to using genetically modified crops, coupled with liberal use of fertilizers.

There are plenty of reasons to be bullish about the fertilizer industry, including:

  • Rise in global population. According to the UN, the global population is expected to expand to 9.5 billion by 2050 from the current 7 billion.
  • Not only is the population growing, but humans are now living longer, thanks to advances in healthcare. This puts added pressure on global food resources.
  • Not only humans, but...

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