When To Buy Mosaic Stock? NYSE: MOS

Good day fellow investors, I just wrote an update on my research platform for Mosaic and as I promised you, I will share it too here. If we look at the stock, it has been volatile since like ever. I started following it somewhere in the mid 2010s. I even owned it once or twice, did okay with it, but nothing spectacular. However if you look at the situation I owned Nutrien more and made money on Nutrien better because there are some situations with mosaics that's good to know but now it is surely very cheap and it offers opportunity because Nutrien is the more stable one and 2020-2022 went up 250% mosaic went up 600% So that is the difference there. Let's go into the business. But before going into the business, just a note, my new book, The Value Investing Handbook, is out. It covers most of what you need to know to compound your wealth for the long term based on the low risk, high reward value investing strategy. If you like reading about investing, there is a lot, 500 plus pages of value investing knowledge. Enjoy. Link in the description below. If we look at the business, Mosaic is potash, phosphate, and distribution in Brazil with some production. Business and there is simply a bad situation, especially in phosphates, as Mosaic needs to buy ammonia and sulfur to create its phosphates product. Sulfur prices due to the war in Iran have exploded, exploded, which doesn't make it profitable for Mosaic to produce phosphates at all. And when the situation is that bad. The CEO says the only thing we can is borrow money to survive. They have an untapped two and a half billion revolver. They will have to take at least half a billion out of that each year as long as that situation persists. But they are still investing, lowered capex a little bit. But the plan here is that low application rates last year, this year as phosphates are expensive, Crop yields will suffer especially where the soil is weaker like Brazil and then you can see the forecasts for the production have not kept up. So at some point the application of phosphates will need to be there and that is where perhaps also sulfur prices go down and that's the opportunity. prices have risen a little bit but not enough to justify The sulfur increases, potash is stable, urea is up a little bit. Now I asked AI about application of phosphates. You can have a few years that you don't put it but then the soil and the yield starts to suffer. Let me know if you're a farmer if that is correct. But there are other risks and one that I was looking for since like a few years is the BHP Janie project coming online. Next year stage 1, then 31, always delayed stage 2, but they will add 8 million tons per annum and that will likely put pressure on the market. But Mosaic produces 9 million tons per annum, let's say 7 million from Esterhazy, which is also relatively new mine, long term, and BHP spent 15 billion to build that kind of production. So we can say, from that perspective, Esterhazy is worth 10 billion, which is double the market capitalization, minus the debt. So just that is priced there. They are reallocating capital, still keeping the dividend. The dividend can be cut, of course, because no point in paying it if you're not producing the cash. But the CFO summarizes investing in Mosaic. First, First, we are burning 500 million per year, but But they say this is a temporary situation, unsustainable and then when the bounce back comes it will be with a lot of pent-up demand and then you will see a revenge fertilizer application with Mosaic benefiting. Like we have seen with the chart earlier. A lot of question of analysts always trying to model stability but the question is not what will happen next quarter or this. The question is, When will the complete sector change? They know that it will come to an end, but the question for investors is, of course, when. Looking a little bit at the financials, total assets 24 billion, equity 11.6 billion. There is significant debt 5.8 billion, which is a cost, especially with increasing rates. However, there is also some value there. Just look at the Ma'aden stake, the Saudi Arabian fertilizer. company that they have a stake in and they will be allowed to sell one part december 2027 december 28 and december 29 the third part and that's 2 billion let's say so One day there will be this release of value that will likely lower debt perhaps buybacks depending on the situation. On capital allocation, again, typical Wall Street. When the situation was great for the company, the stock was high, they spent $3 billion on buybacks and now they are cutting them. Stupid Wall Street, wrong time of the cycle, but that is what it is. There have always been issues from Mosaic since I watched it, but OK. The market doesn't like it. Wall Street's 2028 rebound means forever, eternity, so they are downgrading it, creating an opportunity for us. They will burn cash, lose money until the situation changes. Now with cyclicals you can look at mid-cycle cash flows and in my 2024 and 2025 analysis I did those calculations. I get to around 500 million per year, so we are trading at 10% cycle yield but of course when things get good and if there is that explosion in demand Mosaic makes a lot of money. When it comes to cyclicals, miners, these fertilizers, the bargain buys are at 15-20 percent mid-cycle average yield so we need to go down another 30 percent 3-4 billion perhaps if the situation doesn't change in the next six months we might be there for a true bargain. Now I have put this on my covered stock list on my research platform, at the end of the month I always see whether I will include it in the diversified portfolio, perhaps with a strategy starting at 1-2%, if it goes lower, increase, if it goes even lower, increase, and then when and if the rebound comes more we follow over time. So I might be buying this in the next 72 hours. I don't own it now for full disclosure. Of course, if you want all the details, the long term, the following, the updates and everything, you can check that on my research platform. 21 day money back guarantee. See how it fits you for the long term. The price is going up by the end of the year. You can lock in that price for you forever if you join before. Thanks for watching. I'll see you in the next video.