Consider S&P names Nutrien and Corteva which have returned double digits YTD

By: Motiur Rahman
Motiur Rahman
Md Motiur is a Financial Analyst at Invezz covering the North American, European and Asian stock markets. He has… read more.
on May 20, 2022
  • Nutrien and Corteva have double-digit returns YTD.
  • Nutrien and Corteva’s first-quarter results have surpassed estimates.
  • Both are benefiting from price increases of agricultural products.

As investors look for defensive names, Nutrien Ltd (NYSE:NTR) and Corteva (NYSE:CTVA) offer great options. Being agricultural companies, they operate in a sector that faces limited macroeconomic shocks. Nutrien has year-to-date returns of 33.16% and closes to 70% in one year. Corteva has 25.80% YTD returns and at least 33% in one year. These double-digit returns happen amid a YTD negative 18% return in the S&P 500. 

In its first-quarter results, Nutrien raised its full-year earnings guidance due to rising prices of crop nutrients. 2022 earnings are expected at between $16.20 and $18.70 per share. The forecast compares to prior guidance of $10.20-$11.80 and $15.20 estimates. The improved guidance occurred after quarter earnings hit $2.49 per share, from the previous $0.22 per share. 

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Similarly, Corteva’s earnings in the quarter came at $0.97 per share, up from $0.79 per share in the prior year. The earnings beat estimates of $0.82 per share. The higher earnings were due to a robust demand for crop protection products. The company expects between $2.35 and $2.55 per share in FY22. 

On Wall Street, Moody says Nutrien’s outlook is stable. The rating agency has Baa2 senior unsecured ratings. Corteva has a neutral rating from JPMorgan. UBS has a price target of $68, while KeyBanc targets $64.

The targets are below the current $59, which implies analysts project further gains. These ratings occur as the war in Ukraine cuts global crop product supply, making the agricultural names to benefit.

Corteva and Nutrien technical analysis

Source – TradingView

Technically, Nutrien and Corteva are trading close to their previous highs. Both of the stocks are at or close to overbought levels and there is a potential for a retracement. We recommend a hold at the current level or buy on a retracement to a support zone.

Summary

Nutrien and Corteva have returned double digits this year. Strong earnings and outlook make both stocks a hold. The stocks can be bought on a retracement from the current levels.

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