Simply Investing Blog

I`m almost always too early when it comes to buying or selling a stock. I`m terrible at timing the market. I stayed true to myself when I started buying the FMC Corporation Stock (ticker NYSE:FMC).

My first buy of the stock was on 6th of January 2025. It was trading at $49.30. This sounded like a deal to me. So I started building a position. During almost the whole January I was up on my position. At some point the stock was trading at $56, so I was up about 15%. Of course I didn`t sell. Maybe I should have sold. 15% return in one month time sounds really good. But I didn`t.

Then the earnings report came on 4th of February. As you might guess, it wasn`t really good. I saw that on the pre-market the stock was down quite a lot. I decided that this a good opportunity and bought some more shares at $40.45 during the pre-market trading session. Usually, I don`t like trading during the pre-market, since there is less liquidity and everything can happen when the market opens. But I made the trade. The market opened at about $36.40. The stock kept going down. I made my usual mistake to be too early when buying. Also, I traded during the pre-market session, which I usually avoid. My average price on this position is about $45.76. This, compared to the price at the time of writing of $36.62, means that I am sitting at an unrealized loss of nearly 20%.

Let me share some details of what I observed in the company. I will also explain why I began building a position. First, let`s start with few rows about the business model of the company:

FMC Corporation is a global agricultural sciences company. It specializes in providing innovative solutions for crop protection, plant health, and soil health. The company’s business model primarily focuses on developing and commercializing a diverse range of products. These include insecticides, herbicides, fungicides, and specialty crop nutrition.

Basically, we can summarize that the company is involved in the agricultural business. I believe that this business has potential. Actually, I believe in the potential of every business that is related to the food production process. Obviously, there are some headwinds for the sector. In my opinion this is the reason why this stock is trading at its current valuation. Based on my belief that the decline in the stock price is related to a temporary sector issue, I have decided to start building a position in the company. I thought that it can`t go much lower than that. Obviously, I was wrong.

Now let`s take a look at some fundamentals that caught my attention:
– Current P/E ratio is about 13.54
– Current P/S ratio is about 1.09
– Current P/B ratio is about 0.99
– Current Price to Cash Flow ratio about 6.87 (significantly lower, than previous levels)
– Current ratio about 1.64 (not great, but I believe it`s acceptable)

Based on these fundamentals I feel that the stock is positioned pretty well. By examining the fundamentals statistics, we can observe that ROE (Return on Equity) is significantly lower than previous years. ROA (Return on Assets) has also decreased. The Net Profit Margin is lower as well. This observation represents the sector difficulties. I choose to believe that these are just temporary headwinds and I`ll be holding to my position.

Let`s take a look on the price chart:

The chart is created on TradingView

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Looking at the chart we can see that the stock price is near its 52 week low. Actually, it trades at levels seen in 2016. The RSI (Relative Strength Index) indicates that the stock is a bit oversold. It`s not too oversold, so it`s not indicating an obvious buy. It may be a situation when I`m trying to catch a falling knife. Still, the stock seems cheap to me.

Let`s have a look into the near future. The EPS (Earnings per share) expectations for 2025 are $3.42; $4.15 for 2026 and $4.36 in 2027. The company pays a dividend. For 2024 it was $2.32 per share. If the EPS expectations are correct, it will be more than enough for the company to maintain the dividend payout. It will also allow the company to reinvest some of the profits into the business. Additionally, if we assume that the dividend payout will be the same for 2025 ($2.32 per share), this will result in a Dividend Yield of about 6.33%. I believe that this is a pretty good compensation for the risk.

My next steps:
I`ll continue holding to my position, without even thinking of panic selling. Of course, there are risks associated to this investment, but I`m willing to accept them. With my upcoming salary I am planning to buy more shares of FMC if the price is below my average. I`m planning to hold for medium to long term.

Data sources: for the fundamentals data and the chart I have used tradingview.com. The numbers I have posted are taken from the mentioned source at the time of writing.
Some of the information may be generated by using AI. Always double check the information and do your own research.