CF vs. MOS: Two Fertilizer Stocks, One Choke Point, and a Split Verdict

This morning CF Industries (NYSE: CF) and Mosaic (NYSE: MOS) showed up on the WSJ "Invisible Stocks" trending list, which is the market's polite way of saying: everyone is suddenly paying attention to names they spent two years ignoring. The catalyst is not subtle. The Strait of Hormuz — the narrow Persian Gulf passage through which a staggering share of global seaborne fertilizer flows — has been effectively closed to commercial traffic since late February 2026. The result is a supply shock that is splitting the fertilizer sector right down the middle, with CF sitting on the winning side and MOS navigating a more complicated story. Let's run the tape.

The Scoreboard

Mosaic (MOS) and CF Industries (CF) ranked as two of the top three gainers on the S&P 500 in mid-March, rising +10.1% and +9.1%, respectively, as the Middle East conflict disrupted fertilizer shipments. That single-session pop was not a one-off. CF Industries has seen its shares surge by a staggering 76% year-to-date, hitting record highs in the $140 range. Mosaic's ride has been far rockier. Despite a 10% gain over the trailing twelve months, the stock plummeted nearly 10% in a single trading session in late March. Same macro headline. Two very different outcomes. The reason is in the inputs.

What Actually Happened

The most significant catalyst has been the near-total blockade of the Strait of Hormuz, a consequence of escalating regional conflict in the Middle East, with roughly one-third of global seaborne urea and 20% of ammonia trade passing through this vital chokepoint. The disruption is structural, not cosmetic. Unlike crude oil, which can occasionally be diverted via long-haul pipelines or redirected around the Cape of Good Hope, the nitrogen infrastructure in the Persian Gulf is specifically designed for direct vessel loading at massive coastal production hubs. With the Strait closed, production from the world's lowest-cost exporters — including Qatar's QAFCO, the UAE's Fertiglobe, and Saudi Arabia's SABIC — is effectively trapped in the Gulf.

In the weeks since the blockade began, urea prices have gone parabolic, surging more than 50% to exceed $720 per metric ton, as buyers from Brazil to India scramble to secure dwindling inventories ahead of the spring planting season. Compounding the Hormuz problem, Russia's Agriculture Ministry abruptly suspended ammonium nitrate exports for at least one month, citing a need to prioritize domestic spring planting. And in mid-March 2026, the Chinese government implemented a near-total ban on the export of nitrogen-potassium blends and several phosphate varieties, including Diammonium Phosphate (DAP). Three supply levers pulled at once. The market is reacting accordingly.

Who These Companies Are and How They Make Money

CF Industries is a pure-play nitrogen producer. Its core products — ammonia, urea, UAN solutions — are manufactured at North American facilities that run on domestic natural gas priced at Henry Hub. That is the entire competitive moat in one sentence. As a pure-play nitrogen producer with the bulk of its assets in the United States, CF Industries benefits from relatively stable domestic natural gas prices while selling into a global market starved for supply. When Middle Eastern competitors are shut out of global trade, CF does not scramble for alternatives — it is the alternative. As a North American pure-play nitrogen producer utilizing low-cost domestic natural gas, CF is geographically insulated from the Middle Eastern turmoil, and its margins have expanded rapidly as it captures a "scarcity premium" from global buyers desperate for non-Middle Eastern supply.

CF is also not a one-trick commodity play. The company is making a strategic pivot toward "blue" ammonia, partnering with various energy firms to capture green premiums. This transition allows CF Industries to maintain high margins even as traditional fertilizer prices fluctuate wildly. CF Industries' $3.7 billion commitment to the Blue Point project is a testament to this shift.

Mosaic operates differently. The Mosaic Company produces and markets concentrated phosphate and potash crop nutrients, operating in three segments: Phosphates, Potash, and Mosaic Fertilizantes. Phosphate prices are rising in this environment — that is the tailwind. But Mosaic is simultaneously getting hammered on the input side. Mosaic is highly vulnerable to the soaring cost of sulfur — a critical raw material for phosphate production — with approximately 44% of the world's seaborne sulfur passing through the Strait of Hormuz. Sulfur prices have doubled in early March, leading analysts to project a potential $250 million hit to Mosaic's EBITDA for Q1 2026. Winning on price while losing on cost is not a clean trade.

The Data Section

CF Industries (CF) — Key Metrics

• FY2025 net earnings: $1.46 billion ($8.97/diluted share); adjusted EBITDA: $2.89 billion
• FY2025 revenue: $7.08 billion, up 19.34% vs. prior year
• FY2025 free cash flow: $1.79 billion; net cash from operations: $2.75 billion
• Repurchased 16.6 million shares for $1.34 billion during 2025, reducing share count ~10%
• Quarterly dividend of $0.50/share declared January 2026
• 2026 capex projected at approximately $1.3 billion, with ~$600 million related to the Blue Point joint venture
• Next earnings report: May 6, 2026; consensus revenue forecast $1.77 billion for Q1 2026

Mosaic (MOS) — Key Metrics

• FY2025 revenues: $12.05 billion; net income: $541 million; operating earnings: $822 million
• FY2025 adjusted EBITDA: $2.42 billion
• Q4 2025: net loss of $519 million; working capital reduction hit cash flow by $960 million, driving net debt up $829 million
• Management flagged sulfur price spike will "significantly compress margins in Phosphates and Mosaic Fertilizantes segments well into 2026"
• Sensitivity: every $10/ton move in DAP pricing impacts adjusted EBITDA by ~$80 million; every $10/ton in MOP impacts EBITDA by ~$65 million
• 2026 guidance: phosphate production at or above 7.0M tonnes; potash ~9M tonnes; capex ~$1.5 billion

The Real Reason the Market Is Split

The market consensus before the Hormuz closure was that both stocks were modestly cheap on mid-cycle earnings and a slow drift higher in nitrogen and phosphate prices. The Hormuz event blew that framework open. CF went from being "reasonably valued" to being repriced as a geopolitical hedge with no natural substitute. Mosaic went from being a "recovery story" to a company caught in a margin vise — strong output prices offset by an input cost that doubled in thirty days.

There is also a regulatory dimension that bargain hunters cannot ignore. The Justice Department has been investigating whether several leading producers of commercial fertilizers colluded to raise prices. The companies whose conduct is under scrutiny include Nutrien, Mosaic, CF Industries, Koch and Yara International. A Texas A&M analysis pegs the Herfindahl-Hirschman Index at approximately 2,382 for nitrogen, 4,553 for phosphate, and 3,455 for potash — exactly the kind of market-structure red flags prosecutors look for when deciding whether to open an inquiry. When the Bloomberg report surfaced, Mosaic shares fell as much as 4.3% while CF Industries dropped as much as 5.5%. No charges, no convictions — but reputational and legal overhang is a real discount to bake in.

Bull / Base / Bear

CF Industries (CF)

• Bull: Hormuz blockade extends through summer planting season. CF runs at near-full utilization. Q1 2026 EPS lands well above the $1.77B revenue consensus. Blue Point clean ammonia premiums layer on top. Stock pushes to new all-time highs.
• Base: Blockade persists through May, then partial resolution. CF captures an exceptional Q1 and Q2, then faces mean reversion in urea prices. The "gas spread" — the difference between U.S. natural gas prices and global nitrogen prices — remains the most important metric to watch in coming quarters. Stock consolidates at elevated levels.
• Bear: Geopolitical de-escalation happens faster than expected, Hormuz reopens, urea prices reverse sharply. DOJ price-fixing investigation escalates to subpoenas. Mizuho has warned the rally may be short-lived. Stock gives back 30-40% of the geopolitical premium.

Mosaic (MOS)

• Bull: Sulfur prices stabilize or fall as alternative supply routes open. Mosaic is racing to secure alternative sulfur sources from North American refineries. If successful, the margin compression thesis reverses and strong phosphate/potash prices flow to the bottom line. Management expects global potash shipments to approach record levels in 2026.
• Base: Sulfur costs stay elevated well into Q2, as management flagged. Mosaic posts another weak quarter but potash volumes hold. Diversification into specialty nutrients via its Uberaba project becomes a longer-term margin hedge.
• Bear: Following its latest earnings report — which included a net loss of $519.5 million — Mosaic faces downgrades from multiple analysts and struggles with rising costs and weaker demand. If China lifts phosphate export restrictions while Mosaic's sulfur costs remain elevated, the operating leverage turns deeply negative.

Action Plan

CF Industries (CF): If you do not own it, the move is already 76% in the books. Do not chase the entire position at current levels. Scale into a starter position (25-33% of target) and wait for a pullback toward the $120-$125 range — likely triggered by any headline suggesting Hormuz de-escalation — to add the rest. If you are already long, trim 10-15% at current highs as a discipline exercise; do not exit the core position. The structural moat (domestic gas feedstock + no shipping exposure + Blue Point clean ammonia optionality) is not going away when the geopolitical premium fades.

Mosaic (MOS): This is the more complex trade. The setup is not broken — phosphate and potash demand fundamentals are constructive — but the sulfur cost headwind is real and the Q1 2026 print is likely to be ugly. Wait for the May earnings event as a potential entry catalyst. A confirmed inflection in sulfur costs combined with potash volume guidance that holds at record levels would be the signal to build a position. Until then, watch, do not buy.

The Cheap Investor Scorecard

Bottom Line

If the Hormuz blockade persists through the spring planting window and North American gas prices stay anchored, CF Industries is a structurally advantaged compounder that is printing money at a rate the market has not fully modeled into forward estimates — and the Blue Point project gives it a second act in clean energy that has nothing to do with geopolitics. If the blockade eases faster than expected, the CF trade becomes a mean-reversion risk. Scale accordingly.

Mosaic is a wait-and-see. The underlying business — world-class phosphate and potash assets, record potash volumes guided for 2026, strong Brazil operations — is not broken. But the sulfur cost shock is a real near-term earnings killer, the DOJ overhang adds headline risk, and the balance sheet took a hit in Q4. The entry point is not today. It is after the May earnings call, when the sulfur cost trajectory becomes clearer and the market has priced in the worst-case Q1 numbers.

Two stocks. One macro catalyst. Very different bets. Know which one you are making.

The Cheap Investor is an editorial publication. Nothing in this newsletter constitutes investment advice. All analysis is based on publicly available data. Conduct your own due diligence before making any investment decision. Past performance is not indicative of future results.