We recently compiled a list of the 11 Best Potash Stocks to Buy According to Hedge Funds.In this article, we are going to take a look at where Sociedad Química y Minera de Chile S.A. (NYSE:SQM) stands against other best potash stocks to buy according to hedge funds.
Potash is a group of minerals and chemicals that contain potassium, a vital nutrient for plants and animals. The term refers to compounds including potassium sulfate, potassium-magnesium sulfate, potassium nitrate, potassium carbonate, potassium oxide, and potassium chloride. Among these, potassium chloride (KCl), also known as muriate of potash (MOP), is the most commonly produced and used form of potash.
Potash is primarily used to produce fertilizers, which are essential for plant growth and development. Fertilizers containing potash help to support plant growth, increase crop yield, and enhance disease resistance. Additionally, potash helps to improve water preservation, making it an indispensable supplement to the natural nutrient content of soils. Soils often lack these essential nutrients, or growing crops have depleted them, making potash a necessary addition to maintain soil fertility. With approximately 95% of potash being used in fertilizers, its role in agriculture cannot be emphasized enough. The remaining 5% is used in the production of potassium-bearing chemicals, such as detergents, ceramics, pharmaceuticals, water conditioners, and alternatives to de-icing salt.
Potash is mined from underground deposits, either through conventional underground ore mining or by injecting water into the underground ore body and extracting the resulting brine. According to a report by the Canadian Government, potash production was estimated at 67.5 million tonnes globally in 2023, with Canada contributing 32.4% of the global supply. Canada, Russia, and Belarus dominate global potash production and accounted for 65.9% of the total in 2023. Canada is the world’s largest producer and exporter of potash, with 11 active mines in Saskatchewan, producing 21.9 million tonnes and exporting 22.8 million tonnes in 2023, which accounts for over 41% of global exports.
Potash prices have fluctuated over the years, declining from 2013 to 2016 and remaining relatively low until 2020. However, in 2021, prices rose sharply due to strong demand, and the surge continued into 2022, peaking at $1,202 per tonne in April, driven by geopolitical tensions and the Russian invasion of Ukraine. By June 2023, prices had fallen to $328 per tonne as global supply concerns subsided.
Potash is a vital nutrient for plants and animals, and its importance in fertilizers cannot be overstated. As the world’s population continues to grow, the demand for potash is likely to increase.
Is Sociedad Quimica y Minera (SQM) the Best Potash Stocks to Buy According to Hedge Funds?
A laboratory technician pouring a specialty blend of industrial chemicals into a beaker.
Our Methodology
To compile our list of the 11 best potash stocks to buy according to hedge funds, we sifted through financial media reports and potash-related ETFs to find companies that are involved in the production and processing of potash. We then used Insider Monkey’s hedge fund database to rank 11 stocks with the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Number of Hedge Fund Holders: 12
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) commonly referred to as SQM, is a Chilean chemical and mining company recognized for its role as one of the world’s largest producers of potash and lithium. The company’s potassium-based fertilizers are sold globally, with a significant presence in major agricultural markets, including North America, South America, Europe, and Asia.
To grow its potassium-based business, Sociedad Química y Minera de Chile S.A. (NYSE:SQM) has been focusing on a large-scale mining operation in the Atacama Salt Flats in northern Chile. The Atacama Salt Flats are a unique geological formation and boast an abundance of potassium-rich minerals, including potassium chloride (KCl), potassium sulfate (K2SO4), potassium nitrate (KNO3), and other valuable resources. The company extracts these potassium-rich minerals from the salt flats, which are then processed and refined into high-quality potash products. Sociedad Quimica y Minera (NYSE:SQM) potash products are highly valued for their ability to improve crop yields, quality, and overall plant health.
Sociedad Quimica y Minera (NYSE:SQM) is working on expanding its production capacity and improving its operational efficiency. The company has been investing in various projects, including the “Adapting Pond Iris” project, which involves improving the hazardous substances pond facilities at its Iris plant, in accordance with the Adaptation Plan for Hazardous Substances Regulation DS 43.
Overall SQM ranks 7th on our list of the best potash stocks to buy according to hedge funds. While we acknowledge the potential of SQM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SQM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
