A decline in demand for fertilizer and weak phosphate prices have taken a toll on Mosaic’s sales volume and profits in the past few years. However, we expect demand from North American farmers to pick up in 2026 after a strong harvest. Morningstar Chief US Market Strategist Dave Sekera thinks this small-cap stock may have bottomed out. “I think this one could be a good play in your portfolio if we’re starting to enter a commodity supercycle,” he adds. We think the shares, trading 19% below our USD 35 fair value estimate, are a buy for long-term investors. Mosaic was one of Sekera’s stock picks on a recent episode of The Morning Filter podcast, 3 Cheap Stocks to Buy Now as Small Caps Heat Up.
Mosaic is a leading producer of potash and phosphate fertilizers. Its US phosphate rock mines and Canadian potash assets provide the company with a stable input base for its products. Mosaic has lower unit production costs than marginal-cost producers. However, more than 70% of global phosphate production comes from players that control their own phosphate rock mines, so Mosaic’s vertical integration is neither unique nor cost-advantaged. Nevertheless, over the long run, Mosaic should benefit from growing global demand for fertilizer.
Key Morningstar Metrics for Mosaic
- : $35Fair Value Estimate
- : 4 StarsStar Rating
- : NoneEconomic Moat Rating
- : HighUncertainty Rating
Economic Moat Rating
While we think Mosaic benefits from a cost-advantaged potash operation, we are not confident that the company as a whole will outearn its cost of capital through a cycle, given our view that the phosphate and fertilizer distribution businesses have no economic moat. In phosphate, the company has a solid but not spectacular cost position. However, phosphate fertilizer production costs at Morocco’s state-owned OCP are lower, leading to Mosaic’s position on the cost curve rising over time as OCP expands production. Given that Mosaic has one of the largest fertilizer distribution operations in Brazil, this business could generate a cost advantage through scale. But we have not seen evidence of that, with this business generally earning distributor-like profit margins.
Read more about Mosaic’s moat rating.
Fair Value Estimate for Mosaic Stock
Our fair value estimate is USD 35 per share. We use an enterprise value/EBITDA terminal value multiple of 7.5 times. Our weighted average cost of capital for Mosaic is roughly 9.5%. In the longer term, we forecast potash prices will reflect the marginal cost of production, which we estimate will remain in the mid-USD 300s per metric ton in 2025 real terms. We expect little impact from tariffs, as potash is currently exempt from US tariffs. For Mosaic, long-term profits should grow thanks to lower unit production costs as the majority of production moves to its lower-cost mines. We forecast its production will eventually rise to over 10 million metric tons, with nearly 90% of volume coming from low-cost mines. We expect companywide unit cash costs will fall from the mid-USD 90s in 2024 to the mid-USD 80s over the next few years.
Read more about Mosaic’s fair value estimate.
Risk and Uncertainty
Fertilizers are among the most volatile commodities, making Mosaic’s revenue and profits subject to large swings based on price movements. Other risks include crop prices, weather patterns, and field conditions, which can affect near-term demand. Ammonia and sulfur are two key inputs for phosphate, and their prices can fluctuate. If ammonia and natural gas prices fall for a prolonged period, Mosaic’s average cost could end up above market prices. We see little tariff risk for Mosaic, as the company could fully pass along tariff costs with price increases. Mosaic’s largest environmental, social, and governance risks come from potential regulation of its carbon and other emissions, effluents, and waste.
Read more about Mosaic’s risk and uncertainty.
Mosaic Bulls Say
- Mosaic’s potash unit costs will fall with the ramp-up of the K3 mine shaft at Esterhazy, which eliminates historical flooding issues at the mine.
- Potash application rates in China and India lag scientifically recommended levels. With these countries working to secure food supply, increasing potash application is required to raise crop yields and food production.
- Phosphate demand for batteries used in electric vehicles will take an increasing share of new supply, keeping fertilizer supply tight and prices higher.
Mosaic Bears Say
- Low-cost phosphate producers such as Morocco’s OCP continue to expand capacity and could take share from Mosaic over the long term by pursuing a volume-over-price strategy.
- Long-term oversupply threatens to reduce the marginal cost of production in potash and lower long-term prices. This includes BHP’s Jansen greenfield project and brownfield expansions from existing producers.
- Fertilizer prices are still well above the marginal cost of production. As prices moderate to midcycle levels, Mosaic’s profits will fall accordingly.
This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of Feb. 3, 2026, close unless otherwise noted.
