Inflation is staying sticky, supply chains are still under strain and the reopening of the Strait of Hormuz has eased some pressure without removing the underlying risks. For investors, that mix can create both potential opportunity and additional pitfalls as energy, shipping and fertilizer costs ripple through earnings and pricing power. This article looks at three stocks exposed to these latest developments, two that may be positioned to benefit from persistent cost pressures and one that could be hurt by higher fuel and logistics expenses, to help you think through where inflation resilience and supply chain disruption might matter most in your portfolio.

A.P. Møller - Mærsk (CPSE:MAERSK B)

Overview: A.P. Møller – Mærsk is a Copenhagen based integrated logistics company that moves containers globally through its Ocean fleet and complements that with inland transport, warehousing, cold chain and customs services for customers in industries such as retail, consumer goods, pharma and automotive.

Operations: Maersk generates most of its revenue from Ocean shipping at about US$34.2b, with Logistics & Services contributing around US$15.4b and Terminals about US$5.4b, partly offset by eliminations and unallocated items.

Market Cap: DKK236.8b

Investors looking at inflation resilience and supply chain disruption should pay close attention to A.P. Møller – Mærsk because its earnings are tightly linked to container freight rates, bunker fuel costs and temporary chokepoints such as the Red Sea and Strait of Hormuz. Recent guidance upgrades and strong Asia led demand sit alongside a 3% net margin, falling earnings and analyst expectations for revenue growth of just 1.1% a year with shrinking margins, which together point to a fragile profit base if spot rates ease or volumes soften. At the same time, heavy ongoing spending on fleet renewal, alternative fuels and terminals, plus reliance on external borrowing, raises the bar for future returns and makes the current valuation and long term assumptions worth scrutinising in detail.

A.P. Møller Maersk’s thin 3% net margin, falling earnings and heavy spending on fleet and terminals make any slip in freight rates or volumes far more uncomfortable than headlines suggest, so it is worth stress testing those assumptions against the 1 key reward and 4 important warning signs (1 is major!)

CF Industries Holdings (CF)

Overview: CF Industries Holdings is a major nitrogen fertilizer producer that turns natural gas into ammonia and related products like urea and UAN, which farmers and industrial customers use to improve crop yields and cut emissions. With plants in North America and sales across global markets, CF sits close to low cost gas and serves cooperatives, retailers, traders and industrial users.

Operations: CF Industries generates most of its revenue from ammonia at about US$2.3b and UAN at about US$2.3b, followed by granular urea at about US$1.9b, with smaller contributions from ammonium nitrate at about US$0.4b and other products at about US$0.5b.

Market Cap: US$17.0b

CF Industries sits at the center of today’s fertilizer squeeze, with strong margins, high ROE of 25.7% and low cost North American gas putting it in a better position than many global peers as nitrogen prices respond to supply disruptions in the Middle East and Europe. At the same time, analysts expect earnings and revenue to decline over the next few years, and the company relies heavily on buybacks and government incentives. Investors therefore need to weigh the current value case and dividend against the risk that tighter markets and elevated prices do not last as long as hoped, or that new capacity, policy shifts and changing farming practices start to affect pricing power and volumes.

CF Industries’ high margins and 25.7% ROE hint at a story that current earnings forecasts might not fully capture, so it is worth lining those strengths up against the 4 key rewards and 1 important major warning sign

Nutrien (TSX:NTR)

Overview: Nutrien is a major Canadian fertilizer and crop services company that helps farmers improve yields by supplying potash, nitrogen and phosphate fertilizers, as well as seeds, crop protection products and agronomic advice through its large Retail network.

Operations: Nutrien generates most of its revenue from its Downstream Retail segment at about $18.2b, with additional contributions from Nitrogen at about $4.3b, Potash at about $3.8b and Phosphate at about $1.9b, partly offset by eliminations and other items.

Market Cap: CA$44.1b

Nutrien sits at the intersection of tight fertilizer supply and persistent inflation, which is why the recent disruptions around the Strait of Hormuz and Gulf nitrogen and phosphate trade matter for this stock. Higher input prices and freight costs can affect margins. At the same time, global grain inventories remain low and crop prices are still well above long term averages, supporting demand for potash and nitrogen even as analysts forecast earnings to decline and ROE to ease from 9.6% to 7.4%. Taken together with high leverage, portfolio reviews in nitrogen and phosphate, and active buybacks and dividends, Nutrien presents a mix of inflation linked potential and balance sheet risk that may warrant closer consideration when evaluating your exposure to fertilizer and food inflation.

Inflation linked pricing and high leverage make Nutrien look like a story where resilience and risk might be pulling in opposite directions, so it is worth weighing that mix against the 3 key rewards and 2 important warning signs (1 is major!)

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.