IPI

The fertilizer industry faces near-term headwinds from elevated raw material costs due to geopolitical disruptions, which pressures margins and may reduce farmer demand due to affordability concerns. However, rising fertilizer prices in 2025-2026 are expected to drive top-line and margin expansion. Three stocks worth monitoring are ICL Group (Zacks Rank #2), Nutrien (Zacks Rank #3), and Intrepid Potash (Zacks Rank #3), all benefiting from higher prices and operational efficiency initiatives despite industry challenges.

The Zacks Fertilizers industry faces near-term headwinds from elevated raw material costs (sulfur, ammonia, natural gas) due to supply disruptions and geopolitical tensions, which pressure margins and may reduce farmer demand due to affordability concerns. However, rising fertilizer prices in 2025 present opportunities for margin expansion. The industry ranks #226 out of 250 Zacks industries and has underperformed the S&P 500 by 47.3% over the past year, though valuations appear attractive at 13.99X EV/EBITDA.

Ashland Inc. (ASH) shares have surged 30.2% over the past six months, significantly outperforming its industry. The rally is driven by improved margin resilience from cost reductions and portfolio optimization, strong free cash flow generation of $103 million, and a doubled $1 billion share buyback authorization. The company's shift to a business-unit-focused operating model supports profitable growth in specialty chemicals.