Potash Stocks

As for the sector - the stocks are in the grip of momentum players, so short-term who knows what will happen. However, consider this - these stocks have boomed on the back of the "agriculture play" that has made so much money since 2006. Anyone taken a look at the chart of beans or wheat recently? They topped out in Feb and March and have plummeted since then, especially wheat.

You had a classic buying fever in commodities in the first quarter. Rice riots, export controls, massive media coverage, prices and volumes exploding in parabolic fashion, and a trader going bust to the tune of $125 million in one day trying to short wheat futures. If that wasn't at least a medium-term top, then I'm a banana.

IMO agrictulture and commodities in general are in for a rough 6-9 months. They became flavour of the month and now they need to fall, go into the doldrums, and bore investors/speculators out of their positions before any meaningful new bull trend emerges. This is not good news for the potash stocks. Now, for all I know pure speculation could carry POT and co further up for a while more, but with the underlying markets deteriorating, this is now an extremely high risk position at the very least, and quite possibly an outright money loser.
 
Michael Judd of Greenwich Consultants. He's enthusiastic about shares of chemical companies.

The Wall Street Journal has ranked him as the No. 1 chemical-company analyst for the second year in a row, and he tops the Journal's overall list of stock pickers this year.

He likes Dow Chemical Dow

companies that produce agricultural chemicals, like Monsanto Monsanto CoMON
121.751 2.681 +2.25% NYSE


Chemical companies on his list include Agrium Agrium Inc AGU
84.38 2.63 +3.22% NYSE


Quote | Chart | News | Profile
[AGU 84.38 2.63 (+3.22%) ], CF Industries Holdings CF Industries Holdings IncCF
128.88 4.81 +3.88% NYSE


Quote | Chart | News | Profile
[CF 128.88 4.81 (+3.88%) ], Compass Minerals Compass Minerals International IncCMP
73.77 1.22 +1.68% NYSE


Quote | Chart | News | Profile
[CMP 73.77 1.22 (+1.68%) ], Mosaic Mosaic Co MOS
119.13 3.71 +3.21% NYSE



[MOS 119.13 3.71 (+3.21%) ], and Potash Potash Corp of Saskatchewan IncPOT
194.52 4.12 +2.16% NYSE

http://www.cnbc.com/id/24852580/site/14081545
 
Quote from aresky:

"As food prices rise, fertilizer producer Mosaic Co. is cashing in. And despite the massive runup in its shares, they actually look underpriced.

....
Indeed, Mosaic's earnings are growing so rapidly that the stock looks underpriced despite the massive run-up. Its forward P/E--the ratio of Mosaic's stock price to next four quarters of projected earnings per share--now stands at 14. That's a shade lower than the forward P/E of the S&P 500 (whose collective earnings are projected to be up only 7%, vs. 160% for MOS). It also represents a discount to ag-sector peers Syngenta (SYT) (18 P/E), Potash Corp. of Saskatchewan (POT) (18), and Monsanto (MON, Fortune 500) (30)."


http://money.cnn.com/2008/04/28/news/companies/mosaic.fortune/
More...
"We find the risk/reward still compelling and would be aggressive buyers of (Mosaic) and (Potash)," wrote analyst Edlain Rodriguez in a report.

Rodriguez raised his price target by $50 to $285 for Potash Corp's New York-listed stock, and raised earnings estimates to $11.50 per share from $11.15.

He raised Mosaic's target by $30 to $195.


In his report, Rodriguez said it was a "matter of time" before Canpotex, which exports for Potash Corp, Mosaic and Agrium Inc (AGU.TO: Quote, Profile, Research), raised potash prices to $1,000 per tonne, a level already being charged by Russian competitors.

Canpotex has already raised prices to Brazil and Southeast Asia to $750 per tonne, and has contracts with major consumers China and India for $650 and $625 a tonne, respectively.


http://www.reuters.com/article/comp...mbol=MOS.N&pageNumber=2&virtualBrandChannel=0


Goldman said it sees 46% potential upside from The Mosaic's closing price Friday, and accordingly revised its 12-month price target from $165 to $195. MOS was added to Goldman Sachs' conviction buy list this morning
 
we live in world where fertilizer stock is worth $80 bil. insane. I'm thinking of buying some jan09 or jan10 200 puts here. what u all think?
 
Wheat has crashed and beans stalled since this thread but Corn looks pretty damn strong, reckon it could hit $10. Ag booms looks to have weathered the correction and heading higher, a bit like oil it is going further than most people thought. So who knows, maybe potash stocks will do the same? Personally I'd rather just own corn futures.
 
VALUATIONS

June 20, 2008 7:35 AM EDT
Merrill Lynch boosted its price target on a number of fertilizer companies today, saying prices for nutrients will continue to rise.

Merrill Lynch raised its price target on Potash Corp. of Saskatchewan, Inc. (NYSE: POT) from $263 to $304. (Buy)
Merrill Lynch raised its price target on Agrium Inc. (NYSE: AGU) from $115 to $155. (Buy)

Merrill Lynch raised its price target on Mosaic Co. (NYSE: MOS) from $180 to $215 (Buy)

Merrill Lynch raised its price target on Terra Industries Inc. (NYSE: TRA) from $61 to $64 (Buy)
Merrill Lynch raised its price target on CF Industries Holdings, Inc. (NYSE: CF) from $190 to $240 (Buy)

http://www.streetinsider.com/Analys...r+Stocks:+POT,+AGU,+MOS,+TRA,+CF/3760074.html
 
Quote from aresky:

VALUATIONS

June 20, 2008 7:35 AM EDT
Merrill Lynch boosted its price target on a number of fertilizer companies today, saying prices for nutrients will continue to rise.

Merrill Lynch raised its price target on Potash Corp. of Saskatchewan, Inc. (NYSE: POT) from $263 to $304. (Buy)
Merrill Lynch raised its price target on Agrium Inc. (NYSE: AGU) from $115 to $155. (Buy)

Merrill Lynch raised its price target on Mosaic Co. (NYSE: MOS) from $180 to $215 (Buy)

Merrill Lynch raised its price target on Terra Industries Inc. (NYSE: TRA) from $61 to $64 (Buy)
Merrill Lynch raised its price target on CF Industries Holdings, Inc. (NYSE: CF) from $190 to $240 (Buy)

http://www.streetinsider.com/Analys...r+Stocks:+POT,+AGU,+MOS,+TRA,+CF/3760074.html
More...



:p :p :p :p :p
 
Quote from Cutten:

As for the sector - the stocks are in the grip of momentum players, so short-term who knows what will happen. However, consider this - these stocks have boomed on the back of the "agriculture play" that has made so much money since 2006. Anyone taken a look at the chart of beans or wheat recently? They topped out in Feb and March and have plummeted since then, especially wheat.

You had a classic buying fever in commodities in the first quarter. Rice riots, export controls, massive media coverage, prices and volumes exploding in parabolic fashion, and a trader going bust to the tune of $125 million in one day trying to short wheat futures. If that wasn't at least a medium-term top, then I'm a banana.

IMO agrictulture and commodities in general are in for a rough 6-9 months. They became flavour of the month and now they need to fall, go into the doldrums, and bore investors/speculators out of their positions before any meaningful new bull trend emerges. This is not good news for the potash stocks. Now, for all I know pure speculation could carry POT and co further up for a while more, but with the underlying markets deteriorating, this is now an extremely high risk position at the very least, and quite possibly an outright money loser.
More...

Great post Cutten..... I would add energy to the 'bubble' list too.

d7
 
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