Q: I'm down about 20% or so on this one. I know you're against averaging down, from what I've read, but do you see long term (5+ years) value at these prices?
5i Research Answer:
NTR is one of the larger Canadian stocks in Canada, at a $34B market cap. It pays a 3.1% yield, trades at a cheap valuation of 10.6X, however, its forward earnings and sales estimates are fairly muted. Fertilizer prices have been coming down, and this has put pressure on the stock. We expect potash prices to stabilize in the coming year or more, and with NTR's strong free cash flow generation and good management team and balance sheet, it can benefit from a stabilization or even potential increase in potash prices.
Over a long period of time, we would be comfortable buying and holding NTR at these levels given its industry-leading position in the space. We believe some patience will be required, though.