BASF, MustGrow Biologics, and K+S Alliance: How to benefit from the megatrend of food security

BASF – Cash flow fuels optimism

While many chemical companies are stuck in a prolonged slump, BASF is showing unexpected strength in its agricultural division. In an otherwise weak market environment, the seed and crop protection business has recently seen disproportionate growth in volume. New products and strategic acquisitions in the biologics sector underscore the company's ambitions. Of particular interest to shareholders is the long-term plan to float this unit on the stock market by 2027. This move could make the value of the profitable agricultural business more visible and give the group additional financial flexibility.

The preliminary consolidated figures for 2025 confirm the picture of an industry under pressure. Sales declined slightly, and operating profit (EBITDA) fell just short of expectations. The real bright spot was free cash flow of EUR 1.3 billion, almost twice as high as in the previous year and a clear upside surprise. This was achieved primarily through stricter investment control. At the same time, the comprehensive restructuring is progressing faster than planned, which is having a short-term impact on earnings but is necessary to position the European locations for the future.

For investors, the question of valuation arises. The current market valuation does not yet appear to fully reflect the robust cash generation. The combination of an attractive dividend yield, an active share buyback program, and the financial leeway provided by the high cash flow forms a solid foundation. The outlook depends on whether the strategy pays off. To do so, the challenging transformation in Europe must be mastered, while further growth is expected in China and in the agricultural business. This requires patience, but the current figures indicate progress. The share is currently trading at EUR 45.90.

MustGrow Biologics – Taking off with Bayer

The Canadian company MustGrow Biologics is banking on a simple but ingenious idea. It uses natural mustard extracts to replace chemical pesticides and fertilizers. What makes it special is not only its organic basis, but also its lean business model. Instead of building expensive factories, the team relies on contract manufacturers and strategic distribution partners. This agile structure enables it to respond quickly to market changes and invest capital efficiently in growth rather than tying it up in assets. The patented formulas for organic fertilizer (TerraSante) and plant protection (TerraMG) form the valuable core IP.

The cooperation with agricultural giant Bayer is a strategic coup and a strong signal of quality. Bayer licenses the TerraMG technology for Europe, the Middle East, and Africa and bears the high costs of approval and market launch in these regions. MustGrow also recently completed a private placement of CAD 2 million at CAD 0.50 per share and a warrant with a strike price of CAD 0.70, which makes the company financially more robust for the next phase. The funds will primarily be used for the production of the TerraSante organic fertilizer, which, according to management, is exceeding demand after field tests showed impressive yield increases in potatoes. In the meantime, the product has even sold out.

The outlook could not be better. Regulatory pressure on chemicals in agriculture is growing globally, as is the demand for effective alternatives. MustGrow is positioning itself in this niche with validated technology and strong partners. Actively scaling production capacity is the logical response to dynamic demand and a crucial step in converting momentum into measurable growth. For investors, this presents an opportunity to accompany a company in a crucial growth phase, in which initial commercial successes confirm the roadmap for further scaling. The share is currently trading at CAD 0.74, underscoring the strength of the latest news.

K+S - Fertilizer specialist benefits from high prices

For investors looking to get involved in the volatile fertilizer sector, German salt and potash producer K+S offers an interesting profile. Although the cyclical nature of the market causes prices to fluctuate sharply, the company has solid fundamentals. A virtually debt-free balance sheet following the recent phase of high prices for potash, salt, and fertilizers and an equity ratio of over 60% form a robust foundation. This financial strength provides a buffer for more difficult market phases and enables strategic investments.

The upside potential comes from several sources. As one of the few remaining large potash producers in the EU, K+S benefits from geopolitical supply chain shifts. In addition, the specialty business, for example with sulfur-containing fertilizer (SOP), is performing well, benefiting from an intact competitive environment and stable raw material prices. In the long term, global food security and European initiatives to achieve raw material independence are driving demand. In the short term, a recovery in potash prices, for example, in key markets such as Brazil, could significantly boost cash flow.

Despite these prospects, caution is advised. The return of Russian and Belarusian competition to the global market and volatile energy prices could dampen immediate earnings expectations. Analysts have therefore recently set more moderate price targets. For value-oriented investors who are prepared to wait out the typical cycle of the sector, however, K+S remains worth considering. The share is trading well below its book value, which could leave room for a valuation adjustment in the event of a sustained market recovery. The share currently trades at EUR 13.70.

The pursuit of food security offers structural opportunities for innovative companies. Despite market turbulence, BASF is demonstrating how established chemical giants can master the transformation with robust cash generation and the planned IPO of its agricultural division. MustGrow Biologics, with its patented mustard technology and partnership with Bayer, demonstrates how agile biopioneers are meeting the growing demand for chemical-free solutions. K+S, on the other hand, is benefiting from geopolitical supply chain shifts as a virtually debt-free European potash specialist. Together, they form a portfolio approach for investors who want to focus on different strategies along the value chain.