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Greater demand for fertilizers and crop protection products will see the global agricultural chemicals market reach an estimated $292 billion by 2030, up from a projected $239 billion this year, researchers Statista and Next Move Strategy Consulting find.
Among the sector's noteables are Flexible Solutions International (NYSE: FSI), American Vanguard Corporation (NYSE: AVD), LSB Industries, Inc. (NYSE: LXU) and ICL Group Ltd. (NYSE: ICL).
Driving agricultural chemicals' global growth is the increasing demand for fertilizers and crop protection products. Farmers need to increase crop production to meet population growth worldwide. The Food and Agricultural Organization (FAO) says that the demand for crop protection chemicals is also a key factor. High consumption of fertilizers that help increase crop production is also spurring growth.
FSI An Undervalued Growth Stock Opportunity For Investors
Flexible Solutions International is a developer and manufacturer of biodegradable polymers for oil extraction, detergent ingredients, and water treatment, as well as crop nutrient availability chemistry. One of FSI’s goals is to feed the world’s growing population more efficiently.
Investors looking for undervalued growth stocks in this sector may want to look closely at FSI. Here’s why:
- Flexible Solutions International's NYSE (FSI) top line sales are growing exponentially. They reached $45.7 million in 2022, up from $34.4 million in 2021, a 33% jump. In 2020, FSI’s volume was $31.4 million, 10% higher than the previous year.
- FSI’s net profit was $3.4 million in 2021,16% higher than its $2.9 million in 2020. Complete 2022 financials will be released on March 31.
- FSI stock is currently trading at a PE ratio (TTM) of 10.40.
- Analyst firm Zacks calls FSI stock likely undervalued. "Considering this, as well as the strength of its earnings outlook, FSI feels like a great value stock right now,” Zacks concludes. FSI was selected by Investor Place for its list of ‘hyper-growth stocks with 10x potential in 2023.”
- FSI’s NanoChem Solutions, Inc. Division, in particular its proprietary agricultural products EX-10, Sun Savr 30 and Sun 27, are specialty chemicals that successfully commercialize technology by combating nitrogen and phosphorus runoff and evaporation. The result: higher crop yields for farmers and more efficient production. FSI’s goal is to feed the world’s increasing population more efficiently.
Raising The Quarterly Cash Dividend By 20%
American Vanguard Corporation (NYSE: AVD) recently pleased its investors when it raised its quarterly cash dividend by 20%. The company is a diversified specialty agricultural products firm that manufactures and distributes for crop nutrition and protection.
In Q3 2022, its revenue rose 3.3% to $152.1 million from the prior year and net income increased 23% to $6.74 million. The higher revenue was accompanied by a 4.4% increase in profit margin, AVD said. Revenue for the company is projected to rise 7.4% on average over the next two years, according to analyst firm Simply WallSt.
LSB Industries, Inc. (NYSE: LXU) is a specialty chemicals company for the agricultural, industrial and mining markets. It has attracted 39% stock ownership from institutional investors. No wonder. Its Q3 2022 performance was eye-catching. Sales rose 45% to $184.3 million compared to the previous year. Net income hit $2.31 million vs. a loss the same quarter in 2021. Its profit margin increased 1.3% this year due in large part to lower expenses.
Simply WallSt. says its quarterly performance exceeded revenue estimates from analysts by 19%.
Signing Agreement With General Mills
ICL Group Ltd. (NYSE: ICL) is a leading global specialty minerals company in the agriculture, foods and industrial markets. It recently signed an agreement to become the strategic specialty supplier of phosphate solutions to General Mills.
This long term agreement begins in June and will initially be focused on North America. ICL says the deal has the potential for international expansion.
For Q3 2022, ICL reports sales of $2.519 million, representing an increase of 41% over the comparable period in the prior year. Net income jumped 181% to $633 million. It says it expects to report results at the upper end of its guidance for the full year.
ICL produces controlled-release fertilizers that optimize crop yield and quality. They also reduce nutrient loss and simplify fertilizer application, ICL says. ICL offers ‘E-Max’ release technology, a polymer coated fertilizer that improves nutrient use efficiency
CONCLUSION
Agricultural specialty chemicals are a growth sector that investors should watch closely for undervalued performance stocks. One is FSI, which reported a 33% increase in sales for 2022. For the full year 2021, it reported a 16% rise in profits on a 10% volume gain. For multiple years, FSI has generated continued increases in both volume and net profit. This is a green company that commercializes its specialty chemicals and offers proprietary and innovative polymer biodegradable additives. FSI is an environmentally-friendly company focused on ESG and socially conscious investing.
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