While stocks hit all-time highs on Tuesday, the fact remains that there is a lot of uncertainty in the economy and in the market. The momentum stocks that led the market higher in 2013 are coming off their highs, and many of the assets that are performing are considered defensive, or they performed poorly in 2013 and are bouncing back. In all likelihood, these trends are going to continue. With that being the case, I think investors should consider adding the following assets on weakness to their portfolios.
1. Mosaic Co. (NYSE:MOS)
Mosaic shares are up over 6 percent for the year, although this is after a lousy 2013. The company suffered from a decline in fertilizer prices that has been a major headwind over the past couple of years. The stock plummeted last summer when the Eastern European potash cartel broke up, which threatened to hit potash prices.
However, Mosaic was prepared for the weakness. It held a lot of cash and it didn’t have a lot of debt. As a result, it was well positioned to buy back its own stock and depressed fertilizer assets on the cheap. At the beginning of 2014 it finalized its deal with CF Industries (NYSE:CF) to buy that company’s phosphate mine, and it also bought back $1.7 billion worth of stock.
Earnings have been weak on a year-over-year basis, but the company’s growth and fiscal discipline have substantially mitigated this weakness considering the decline in fertilizer prices. As a result, the company is extremely well positioned to benefit as agricultural commodity prices rise and as investors become interested in fertilizer stocks once again.