COMPANY DESCRIPTION

Mosaic is a producer and marketer of concentrated phosphate and potash crop nutrients. Co. mines phosphate rock in Florida and processes rock into finished phosphate products at facilities in Florida and Louisiana; and mines potash in Saskatchewan, New Mexico and Michigan. Co. also has other production, blending or distribution operations in Brazil, China, India, Argentina, and Chile, and an investment in a phosphate rock mine in the Bayovar region in Peru. Co. has two segments: Phosphates, which sells phosphate-based crop nutrients and animal feed ingredients; and Potash, which sells potash, mainly as fertilizer, but also for use in industrial applications, and as animal feed ingredients.

 

ECONOMIC MOAT

in our opinion Mosaic does not have a moat.  The company relies on superior execution for success.

 

OUTLOOK

The Phosphates line finished the year with robust global shipments, as prices strengthened. The Potash business also posted good results. The solid performance ought to continue. We think demand for fertilizer will probably increase somewhat over the next couple of years. The acquisition late last year of Archer Daniels Midland's fertilizer distribution business (located in Brazil and Paraguay) has increased Mosaic's distribution capacity in South America and should considerably accelerate the company's growth plans there, too. Mosaic has been active in buying back stock in recent times. The company spent roughly $2.8 billion on this front during 2014. Stock repurchases should continue to benefit earnings per share going forward

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STRENGTHS

  • Leading producer of concentrated phosphate and potash crop nutrients

  • Geographically diversified revenue base offsetting concentration risk 

WEAKNESSES

  • Limited number of key production and distribution facilities

  • Non-ownership of controlling equity interest in non-consolidated companies 

THREATS

  • Volatile raw material and energy prices may affect Mosaic’s gross margins and profitability

  • Adverse weather conditions could affect facilities and supply chain

    Inflow of brine and water affecting the operating activities at Esterhazy 

OPPORTUNITIES

  • Acquisition of CF’s phosphates business would expand Mosaic’s capacity

  • Positive outlook of global fertilizer market could drive the company's growth 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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