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Iran Conflict Fuels Fertilizer Stocks’ Bullish Setup

As conflict breaks out in the Middle East between Israel and Iran, markets have begun to react as anyone would normally expect. Stock indexes, such as the NASDAQ-100 and S&P 500, have leveled off in a risk-off response, and oil prices have risen by over 6% during the past week alone. However, there is one not-so-obvious market that investors could (and should) look at today.

This market is the fertilizer industry, a part of the basic materials sector that is as pivotal to the global food supply as transport and everything else. Iran's role in this theme is that it has become the eleventh-largest exporter of fertilizers, which isn’t such a crowded position to begin with.

The real impact comes through the Strait of Hormuz and its potential closure due to the conflict.

If the Strait does close, this would impact oil prices but, more importantly, natural gas prices. Not only would Iranian fertilizer exports cease, but the bottlenecks in natural gas production would also prevent the manufacture of more phosphate and ammonium nitrate (key fertilizer chemicals). This presents a profit opportunity for names like CF Industries Inc. (NYSE: CF), The Mosaic Co. (NYSE: MOS), and Nutrien Ltd. (NYSE: NTR) moving forward.

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Price Action, Size Leads the Way for Nutrien Stock

When it comes to reading the subtle signs and language of the stock market, price action and market capitalization are two of the most reliable ways to find stocks that can potentially break out in the near future, as long as the right fundamental setups are there.

This is where Nutrien stock comes into play. It trades at a new 52-week high, signaling to investors that bullish momentum is rewarding its supporters. Additionally, its $42 billion market capitalization is nearly four times that of its peers on this list.

A leadership position in the industry might have helped institutional investors justify opening new positions in this company to fulfill future optimistic expectations. This might explain why those from the Vanguard Group decided to buy up to 4.3% of Nutrien in early May 2025, a stake that is now worth over $1 billion.

Interest from one of Wall Street’s biggest asset managers can definitely help investors develop their own bull cases for Nutrien, and even if profits take a bit to realize themselves in the bottom line, there is another added benefit.

Cushioning a potential waiting period, shareholders can enjoy a $2.18 per share dividend payout, which, at today’s prices, translates into an annualized dividend yield of up to 3.5% to beat inflation rates in the United States.

An Updated Industry Gauge in CF Industries

Now that the bigger players have gotten their fit in positioning for Nutrien stock, the second wave of investment is now running into the smaller players in the space to play a catch-up strategy. As of early June 2025, those from Inspire Investing decided to tag on Vanguard’s tail and seek some exposure in fertilizer stocks.

This time, choosing to build up a $1.1 million stake in CF Industries stock, while not the biggest one, shows some willingness for further institutional capital to come in and support the potential expansion in the industry. Of course, all of this needs one reasonable catalyst to take place and move the stock’s price.

Looking at where Wall Street analysts expect earnings per share (EPS) to go for the rest of 2025, nothing much can be deducted from these views, which, of course, have zero reflection of where fertilizer prices (and earnings) could end up once the real effects of the Iran conflict are seen.

Considering all that is happening in the world, chances are CF will either report a decent earnings beat by the time the next quarter rolls around, or management might comment on a more positive note about these future EPS potential ranges.

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Mosaic Stock: For Discount Hunters

Not only in terms of market capitalization and price action, but Mosaic stock commands the most discount out of all the names in today’s fertilizer list. This creates an opportunity for investors to consider tagging along for the coming industry expansion if Iranian bottlenecks end up playing out.

Because the stock now trades at a price-to-book (P/B) ratio of only 0.9x, it represents a significant discount to the rest of the materials sector, with its average P/B multiple of 5.4x today. Under these circumstances, investors have a compelling opportunity to position themselves for a multi-month run in the industry.

Furthermore, the company has received two recent green checks from Wall Street analysts. First, from Scotiabank, which placed an Outperform rating on the stock as of mid-May 2025, and then from Barclays, whose analysts viewed the company as Overweight and valued it at up to $40 per share as of today.

To prove Barclays right, Mosaic would have to rally by 12% from its current trading level, and with potential Iranian bottlenecks, it may just do so.

Written by Gabriel Osorio-Mazilli

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