Investing

NTR the best inflation stock

  • Last Updated:
  • Jun 8th, 2021 6:25 pm
[OP]
Jr. Member
Jan 30, 2020
140 posts
163 upvotes

NTR the best inflation stock

I had a feeling all this fed/ fiscal spending would cause significant inflation last summer and went heavy into NTR. That has turned out to be a great choice and it is rocketed so much that is now a huge percent of my portfolio.

I'm still extremely bullish on this stock. I don't belive inflation is transitory. However it might be time to the a bit of profit? What do you guys think?
23 replies
Member
Dec 8, 2020
266 posts
266 upvotes
Toronto
OP, potash is a good one.

I would have thought MOS was a better pick than NTR?

Looks as though by 2024 MOS could be bigger than NTR.
Learn something new daily, question everything, avoid answering questions.
Sr. Member
Jul 30, 2012
820 posts
962 upvotes
Wiretin wrote: I had a feeling all this fed/ fiscal spending would cause significant inflation last summer and went heavy into NTR. That has turned out to be a great choice and it is rocketed so much that is now a huge percent of my portfolio.

I'm still extremely bullish on this stock. I don't belive inflation is transitory. However it might be time to the a bit of profit? What do you guys think?
Early this year, there was some interest surrounding NTR. I, like you did some significant buying on NTR LY. I had an initial target of $65 USD and timely your post, had been doing some fundamental work on it again. Guidance has continued to ratchet up since Jan, and I am in the camp that Inflation is going to be here for at least 12 months and possibly more. The reason is input prices don't (in fact, can't) change on a daily/weekly basis (Ag commodities, speaking). The Fed's definition of "transitory" is likely different than mine. Most input forecasts at minimum are quarterly based and NTR Cashflow has not peaked for '21. Q2 is always NTR's biggest generator, and most comps place it at 30% over '20 Q2.

As always, it depends on one's investment portfolio, risk, etc but I am planning to continue my hold. Multiple expansion is quite likely here and a $70>$75 USD is possible based on my calcs.

Running a Stop may be an option if you are worried about the downside but also FOMO.

Jan 7_Nutrien Discussion
Deal Addict
Oct 16, 2013
2342 posts
710 upvotes
New Brunswick
I would say buying an ETF like oil, materials, real estates then industrial would be better.
Sr. Member
Jul 30, 2012
820 posts
962 upvotes
raichu1 wrote: I would say buying an ETF like oil, materials, real estates then industrial would be better.
As always, depends on timing. NTR (USD) has outperformed Oil, Materials, & REIT etfs in the last year. Regardless, if an investor has an inflation thesis, it should include Ag commodities as history shows they can outperform during inflationary periods. As for realestate, there is a significant difference between owning a REIT vs actual titled property.

Commodity Charting

Investors can look at MOO & COW.TO for Ag exposure if they want an etf.
Member
Dec 8, 2020
266 posts
266 upvotes
Toronto
raichu1 wrote: I would say buying an ETF like oil, materials, real estates then industrial would be better.
^^^ that & there are so many choices to diverse as well as cyclical plays.

I follow the credit suisse group REML, SLVO, USOI, specifically been in & out of SLVO which I buy at the $6 mark and for it's dividend with a + $0.50 on a gain & out

I'm also waiting for JO to cycle back to $31, then I buy back in, then sell a cc option when it hits $35.
Learn something new daily, question everything, avoid answering questions.
Deal Addict
Nov 24, 2013
1575 posts
886 upvotes
Toronto
Was looking into getting into NTR as well, but was holding back waiting for a dip. The recent spike is probably transitory and to do with the news that a major potash mine went offline.
Deal Expert
Jan 27, 2006
17112 posts
9847 upvotes
Vancouver, BC
Stocks like NTR are highly dependent on crop prices. Right now crop prices are high and the farmers will make a lot of money this year so they can spend on stuff that NTR sells which is good for NTR. However, arg/farm stocks are the ultimate short-term cyclical as farmers can and will plant more of their field when prices are high which may cause overproduction the following year due to overplanting which will cause crop prices to drop. Dropping crop prices are bad for NTR...

I would take out my cost base and move the money into other areas. If you are looking for something that will benefit from your thesis, then any other base commodity play would have similar drivers like NTR EXCEPT the time frames are generally longer so you have more time to benefit from the trend.
Member
Oct 25, 2009
353 posts
272 upvotes
I have the same (good) problem, I slowly been selling as it goes higher... I will unload the rest of my position if it hits 100$ (really good chance with a recent break out)
Sr. Member
Jul 30, 2012
820 posts
962 upvotes
craftsman wrote: Stocks like NTR are highly dependent on crop prices. Right now crop prices are high and the farmers will make a lot of money this year so they can spend on stuff that NTR sells which is good for NTR. However, arg/farm stocks are the ultimate short-term cyclical as farmers can and will plant more of their field when prices are high which may cause overproduction the following year due to overplanting which will cause crop prices to drop. Dropping crop prices are bad for NTR...

I would take out my cost base and move the money into other areas. If you are looking for something that will benefit from your thesis, then any other base commodity play would have similar drivers like NTR EXCEPT the time frames are generally longer so you have more time to benefit from the trend.
Nitrogen and Potash are the largest inputs required for N. American largest crops (Corn & Soybean). This is the basis for NTR business. Based on cyclical demand over the last 15 years (including 2 "supercycles" and now entering our 3rd), Corn & Soybean prices have been among the strongest performing commodities. Copper (which is usually viewed as the "growth" commodity) actually under performs relative during those inflationary periods/cycles. In fact, Copper has significantly under performed over the last 15 years, period. Silver has performed similarly to the grains although still under.

The notion that grains have "shorter" trends during inflationary periods is not a supported thesis as the chart shows.

Commodity Charting_Corn_Soybean_Copper_Silver_Oil
Last edited by DealRNothing on Jun 5th, 2021 11:09 pm, edited 2 times in total.
Sr. Member
Jun 2, 2020
578 posts
527 upvotes
V5y1v1
Congrats on the gains OP.

If you are looking for commodities I just listened to a podcast on the COM etf and it sounds interesting. 12(?) commodities that have various allocations based on a rules based index. Was flat the past few years until COVID unlike other commodities etfs that were hammered and is up 38% in the last year. Higher lows and lower highs than DBC and DBA (which I have some calls for).

Just food for thought
Sr. Member
Jul 30, 2012
820 posts
962 upvotes
PaddyM77101 wrote: Congrats on the gains OP.

If you are looking for commodities I just listened to a podcast on the COM etf and it sounds interesting. 12(?) commodities that have various allocations based on a rules based index. Was flat the past few years until COVID unlike other commodities etfs that were hammered and is up 38% in the last year. Higher lows and lower highs than DBC and DBA (which I have some calls for).

Just food for thought
Just took a quick look... For those interested, I would suggest doing a "deep dive" on what triggers a "short" (flat). Because commodities carry significant volatility even short-term, one would not want to be stopped out of positions due to short term volatility within an uptrend in inflation (which is of course why you would own commodities anyways, lol).
Deal Expert
Jan 27, 2006
17112 posts
9847 upvotes
Vancouver, BC
DealRNothing wrote: Nitrogen and Potash are the largest inputs required for N. American largest crops (Corn & Soybean). This is the basis for NTR business. Based on cyclical demand over the last 15 years (including 2 "supercycles" and now entering our 3rd), Corn & Soybean prices have been among the strongest performing commodities. Copper (which is usually viewed as the "growth" commodity) actually under performs relative during those inflationary periods/cycles. In fact, Copper has significantly under performed over the last 15 years, period. Silver has performed similarly to the grains although still under.

The notion that grains have "shorter" trends during inflationary periods is not a supported thesis as the chart shows.

Commodity Charting_Corn_Soybean_Copper_Silver_Oil
The problem with ANY crop is that the yields are subject to variations in the weather - ie perfect growing conditions could create a bumper crop this year all over the world which would drive down prices OR we could have drought conditions hitting one growing area or another over multiple years. As crop yields are subject to natural occurrences, so are the returns for businesses like NTR.

On the flip side, base materials are rarely subject to the weather with the possible exception of natural gas which is much more regional than something like oil - ie a hot Summer followed by a really cold Winter in North America will cause natural gas prices shoot up as the reserves are depleted before it gets a chance to refill.

As for your chart, how about extending the chart another 10 years so that it starts from 1996. Why 1996? The same reason why 2006 was picked...

Over the time period of 1996-06-05 today, corn was up 98%, soybeans up 115%, Copper up 309%, silver up 438% and WTI oil up 240%.... In other words, corn significantly underperformed all other materials that you choose over the last 25 year period. In fact, both corn and soybeans were the WORST performers.
Sr. Member
Jul 30, 2012
820 posts
962 upvotes
craftsman wrote: The problem with ANY crop is that the yields are subject to variations in the weather - ie perfect growing conditions could create a bumper crop this year all over the world which would drive down prices OR we could have drought conditions hitting one growing area or another over multiple years. As crop yields are subject to natural occurrences, so are the returns for businesses like NTR. On the flip side, base materials are rarely subject to the weather with the possible exception of natural gas which is much more regional than something like oil - ie a hot Summer followed by a really cold Winter in North America will cause natural gas prices shoot up as the reserves are depleted before it gets a chance to refill.
The fact is ANY commodity is cyclical. Just as weather affects food production, pandemics, employment, etc affect demand(s) for lumber, silicon, lithium, copper, etc. It's unlikely anyone could make a case for current lumber prices, etc remaining at these levels. One of the largest drivers of commodity prices is higher interest rates and a lower $USD, regardless of demand. Oil, in particular, has actually proven this out over the last 12 months.
craftsman wrote: As for your chart, how about extending the chart another 10 years so that it starts from 1996. Why 1996? The same reason why 2006 was picked...
Over the time period of 1996-06-05 today, corn was up 98%, soybeans up 115%, Copper up 309%, silver up 438% and WTI oil up 240%.... In other words, corn significantly underperformed all other materials that you choose over the last 25 year period. In fact, both corn and soybeans were the WORST performers.
Despite your tone, I picked 15 years as a more logical time frame for a typical investor in higher risk investments (i.e. commodities). 3 cycles is a more realistic investment frame (15+ years) and also included the rampant increases/peaks of 2008 / 2011. I've noted several of the RFD crowd panic on a 10% correction over a few months, so I hardly think many here plan on holding commodity plays through 25 years, let alone 5 or 15.

Frankly, I don't recommend holding any cyclicals outside of obvious inflationary periods (like now). For most commodities, that's typically 1-2 years trough to peak. The key to any commodity is buying during trough demand/prices/cycles. Last year, was an obvious trough level for most types.
Deal Expert
Jan 27, 2006
17112 posts
9847 upvotes
Vancouver, BC
DealRNothing wrote: The fact is ANY commodity is cyclical. Just as weather affects food production, pandemics, employment, etc affect demand(s) for lumber, silicon, lithium, copper, etc. It's unlikely anyone could make a case for current lumber prices, etc remaining at these levels. One of the largest drivers of commodity prices is higher interest rates and a lower $USD, regardless of demand. Oil, in particular, has actually proven this out over the last 12 months.
Yes, all commodities are cyclical and thanks for agreeing to what I said above. Crops are the most cyclical as crops are basically 'reset' every year as farmers try to plant the best crop to take advantage of the higher prices or reduce crops for those crops with the lowest price. No other commodity can reset their land and production annually - ie a gold miner can't decide to change to a nickel mining the following year when gold drops in price and nickel goes up, nor can you mine more copper out of a depleted mine... Only crops can switch production and re-use the land over and over and over again. You just can't do that with other commodities like oil, natural gas, metals... you have to find new mines or new oil fields to drill.



What tone?

Besides, the larger the data set used, the better the conclusions that can typically be found. If you use the same chart, and you extend it out to more economical cycles (ie to 1990 - the longest the website will allow), you'll see the following:

1. Oil has the most volatile swings on average with the most swings and any of the 5.
2. Silver is surprisingly volatile as well with the highest peak but fewer swings than oil.
3. Copper has about 1/4 the peak size as oil but has very similar volatility.
4. The worse of the group is probably soybeans with few peaks and ran within a channel.
5. Crop prices tend to have a sharp peak and then drop down quickly.

What can you conclude?

A. Oil and silver out of the 5 commodities are probably the best cyclical trades in terms of frequency of the trade and the height of the peaks from the lows.
B. Copper seems to be trending upwards with higher highs and higher lows over the time period
C. The crops almost always do round trips from the highs back down to the same lows prior to the highs while everything else keeps the effects of inflation even at the lows.
D. Crop prices have much sharper peaks and return back to their lows much faster than others - look at the following peaks for crops -> Spring 2004, and Summer 2008 as well as the 'substained increase from 2011 to 2014. Each one of those periods saw increases oil prices but the oil prices went up much further and stayed up for much longer - > 2004 to 2008 (which encompassed the two peaks for crop prices) and 2010 through to late 2014.

Thanks for agreeing with me again as I stated much earlier on RFD that commodities are trades nothing more. And thanks for the link to the charts which show that crops are much more cyclical in nature than other commodities which I pointed out at the start.
Sr. Member
Jul 30, 2012
820 posts
962 upvotes
Providing viewers don't mess with the dates and data as per your research, I went back to 1990 and brought up 5 year cycles to current. The charting does not suggest crop cycles (pricing) are necessarily any shorter than any other commodity. As per my original posts, most commodities demonstrate a 1>2 year(s) period of strength (and weakness, lol). Oil in fact can have quite truncated cycles less than that.

1990-1995 Commodity Cycle

1995-2000 Commodity Cycle

2000-2005 Commodity Cycle

2005-2010 Commodity Cycle

2010-2015 Commodity Cycle

2015-2021 Commodity Cycle
Deal Expert
Jan 27, 2006
17112 posts
9847 upvotes
Vancouver, BC
DealRNothing wrote: Providing viewers don't mess with the dates and data as per your research, I went back to 1990 and brought up 5 year cycles to current. The charting does not suggest crop cycles (pricing) are necessarily any shorter than any other commodity. As per my original posts, most commodities demonstrate a 1>2 year(s) period of strength (and weakness, lol). Oil in fact can have quite truncated cycles less than that.

1990-1995 Commodity Cycle

1995-2000 Commodity Cycle

2000-2005 Commodity Cycle

2005-2010 Commodity Cycle

2010-2015 Commodity Cycle

2015-2021 Commodity Cycle
I would like to point out that the whole "mess with the dates and data as per your research" was something you introduced and provided your opinion on. I just provided more data and analysis along those lines. If you don't believe my analysis supports your point, that's fine. You can believe what you like and I'll believe what I like.
Sr. Member
Jul 30, 2012
820 posts
962 upvotes
Wiretin wrote: I had a feeling all this fed/ fiscal spending would cause significant inflation last summer and went heavy into NTR. That has turned out to be a great choice and it is rocketed so much that is now a huge percent of my portfolio.
I'm still extremely bullish on this stock. I don't belive inflation is transitory. However it might be time to the a bit of profit? What do you guys think?
DealRNothing wrote: Early this year, there was some interest surrounding NTR. I, like you did some significant buying on NTR LY. I had an initial target of $65 USD and timely your post, had been doing some fundamental work on it again. Guidance has continued to ratchet up since Jan, and I am in the camp that Inflation is going to be here for at least 12 months and possibly more. The reason is input prices don't (in fact, can't) change on a daily/weekly basis (Ag commodities, speaking). The Fed's definition of "transitory" is likely different than mine. Most input forecasts at minimum are quarterly based and NTR Cashflow has not peaked for '21. Q2 is always NTR's biggest generator, and most comps place it at 30% over '20 Q2.

As always, it depends on one's investment portfolio, risk, etc but I am planning to continue my hold. Multiple expansion is quite likely here and a $70>$75 USD is possible based on my calcs.

Running a Stop may be an option if you are worried about the downside but also FOMO.

Jan 7_Nutrien Discussion
@Wiretin You might be interested in NTR's PR yesterday, if you have not seen. Volumes / EBIDTA targets raised through 2H '21
Nutrien Market Update_Jun 7
Jr. Member
Jan 3, 2021
117 posts
117 upvotes
NTR is garbage and not going anywhere.

The only way it takes off from here is if the dollar drops.

Like Craftsman said, this is all tied to agriculture cycles.
[OP]
Jr. Member
Jan 30, 2020
140 posts
163 upvotes
pfcresu wrote: NTR is garbage and not going anywhere.

The only way it takes off from here is if the dollar drops.

Like Craftsman said, this is all tied to agriculture cycles.
This stock keeps making new all time highs and is up over 100% from the lows last summer. I wish I had more of this garbage in my account. Thanks for pointing agricultural commodities are tied to ag cycles

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