At first glance, things look very good for the Kassel-based salt and fertilizer producer K+S.

With a price increase of more than 30 percent, the share is one of the few top performers in the M-Dax small-cap index.

In the second German stock exchange league, only the securities of Aixtron and the armaments group Rheinmetall have performed better in the course of the year.

At second glance, however, there are also some negative aspects that make some investors skeptical about the investment.

K+S is undoubtedly one of the beneficiaries of higher food and fertilizer prices.

In addition, some positive exchange rate effects at the beginning of the year helped the company to show a good balance sheet.

For the first quarter of 2022, the company reported a jump in sales of 65 percent to 1.2 billion euros compared to the previous year.

During the same period, the operating result Ebitda more than quadrupled to 524 million euros - and this despite the fact that the company was struggling with lower sales volumes and increased costs for energy, logistics and materials.

Forecast recently raised

The positive development at K+S was primarily driven by very good business in the agricultural segment.

In the view of the Management Board, things should continue to be similarly positive there.

The full-year forecast for the Group was therefore raised in the spring.

The management expects an Ebitda of 2.3 to 2.6 billion euros for the year 2022, which would correspond to more than doubling the operating result compared to the previous year.

Despite this positive development, the K+S share has lost more than 40 percent of its value in the past few months compared to its annual high of just under EUR 37 recorded in mid-April.

This was partly due to the negative general mood on the stock markets.

In addition, K+S itself warned in the most recent quarterly report of possible production interruptions caused by possible impairments in the energy or gas supply to German locations.

While the restart of the Nord Stream I natural gas pipeline is being observed in Germany, it is above all the German industrial companies who are cheering.

"Should there be a gas shortage, this would lead to impairments in the energy supply of the German locations and thus to restrictions in production," says the K+S management.

There could also be headwinds related to rising fertilizer prices.

Qu Dongyu, director-general of the Food and Agriculture Organization of the United Nations (FAO), for example, warned in early April that, given rising food and fertilizer prices, high fertilizer prices could contribute to fewer crops in the future Fertilizer is used, which would reduce the yield in the coming harvests and thus drive up prices even more.

This could further reduce demand.

Analysts are cautious

Only a few analysts currently see K+S as a stock worth buying.

The majority of the analysis companies assign a rating of "hold" or "neutral".

Meanwhile, DZ Bank has left the rating for K+S ahead of the figures for the second quarter on “buy” with a fair value of 37 euros.

According to the study, the fertilizer and salt company should present very strong results.

According to DZ Bank, the most recent price correction does not adequately reflect the high degree of tension in the supply-demand relationship on the potash market that will last well into 2023.

However, the most recent course correction mentioned by DZ Bank is only a small part of a rollercoaster ride that has been going on for years.

After a multi-year low of EUR 4.50 was marked in March 2020, the price increased eightfold in the following two years and reached a six-year high of EUR 36.45 in April 2022.

Volatile share price for years

After the price rally, prices collapsed to a peak of EUR 18.90 at the beginning of July, after which the K+S share was able to temporarily stabilize around the EUR 21 mark.

The papers are thus listed at around the level of the 200-day moving average of EUR 21.40.

A breakout to the upside would signify a switch back to the overall uptrend.

The next price targets would then be around the 30 mark and the multi-year high from April at 36.45 euros.

Despite the currently exciting chart technology, the K+S share was not able to convince in the long term.

The price development was like a real roller coaster ride.

This is also the reason why only a moderate price gain of an average of 7.3 percent per year has been calculated here over the past 20 years.

In contrast, the M-Dax increased by an average of 10.1 percent per year in the same period.

For many investors who bought shares at an unfavorable time, however, K+S was a real capital destroyer.

This is shown by the fact that the former record highs from 2008 at over 90 euros are miles away.

K+S is also currently not a good choice for dividend fans.

Because in the past there have always been cuts in distributions, and the current dividend yield is comparatively low at 1.0 percent.