One of the standouts of today's trading session was Nutrien, which logged a 4.3% performance and outperformed the S&P 500 by 3.5%. The Agricultural Inputs stock is now trading at $89.77 per share and may still have upside potential because it is still -19.21% under its average target price of $111.11. Analysts have set target prices ranging from $65 to $155 dollars per share, and have given the stock an average rating of buy.
The market seems to share this optimistic view, since Nutrien has a short interest of only 1.4% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
Another way to gauge the sentiment on Nutrien is to look at the percentage of institutions that are invested in the stock. In this case, 70.3% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
Institutions have vast resources. If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
Analyst coverage, short ratio, and institutional ownership say a lot about how the market views a stock. But markets can be wrong. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about NTR:
The stock has trailing 12 month price to earnings (Eps) of $12.35 per share
Nutrien has a trailing 12 month Price to Earnings (P/E) ratio of 7.3 compared to the S&P 500 average of 15.97
The company has a Price to Book (P/B) ratio of 1.8 in contrast to the S&P 500's average ratio of 2.95
Nutrien is a fertilizer company, which is classified within the basic materials sector. The sector average P/E and P/B ratios are 8.57 and 1.86 respectively
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