In the world of commodities, finding companies that would qualify as "value picks" typically relies on assessing the fundamentals underlying the business in question, with a heavier emphasis on macroeconomic factors than in most other typical sectors, due to the effects supply and demand have on the commodity underpinning the company one is assessing.
In the case of Canadian fertilizer producer Nutrien Ltd. (TSX:NTR), potash, and the byproducts of potash production, have been in a bear market in supply and demand terms for the past decade or so. The company itself is a merged entity, formerly Agrium and Potash Corp., two key players in global potash production.
I have liked Nutrien for some time now, for a number of key reasons. First and foremost, the combined entity provides investors with a level of market clout other firms do not possess.
Nutrien represents a significant percentage of North American potash production and is a global player in this regard. Given the fact that demand appears to be outstripping supply for potash and potash-derivative products, I expect Nutrien to continue to perform well and provide investors with a healthy dividend in the long run (current yield is 3.3%).
Bad weather has negatively affected commodity supply, which has hit the company's balance sheet in the short term, but should bode well for the company relative to its competitors as Nutrien has the ability to ratchet up production where necessary (some mines are under producing at the moment) to meet future demand.
Invest wisely, my friends.
