Agrium (AGU.TO)

A hedge fund is currently trying to get them to surface some value out of their retail division. Doesn’t think this is a smart move for the company. Management can probably get a little bit better in inventory management and improving some of the margins of their retail division. Expect there is some potential for some upside surprises in earnings.

Executing their business plan very, very nicely. Their retail business is quite accretive to their overall business plan. Really likes the agriculture theme going forward. Good for a long-term hold.

He likes it in that you got nitrogen, potash, phosphate and a retail side all in one holding and, the retail smoothed it out. If they split it, is not sure if you wouldn’t get the retail up to 8.5 and the rest would go down a little bit. He is hoping that they keep it as is. Thinks it is worth $110-$115 a year out.

An investment firm would like them to spin out their retail division, but the company does not want to do this. Any time you have this kind of investor interest, it is a Buy.

Will be buying back shares. Have allocated $900 million. Will announce a range in which they will purchase the shares sometime in mid-October. E.g. if the range is $90-$100, they will buy up to 10 million shares at $90 or 9 million shares at $100.

Thinks the run-up for this one is probably over. The commodity growing season is over in the US.

(A Top Pick June 22/11. Up 19.94%.) Still likes but is getting a little bit overbought so he may be looking to take profits and selling it all.

Has benefited from the high corn prices and the drought in the US. With the crop insurance and high corn prices, farmers income is quite attractive, which is good for fertilizer stocks. They also have their retail side. Particularly strong in nitrogen which is something that has to be reapplied every year. She can see at least $111 a year from now.

Of the large agricultural stocks in Canada, he thinks this one is the best managed and the best business mix between fertilizer and retail. As retail becomes a bigger and bigger portion of their operating profit there is a very good chance of a multiple expansion in the stock. Not expensive at 9X earnings. Expects the dividend yield will grow quite materially in the future.

Model 121.78. He would hold. Look for any weakness to be a buyer. Take profits if you do have them. Aug 2 or 3 earnings report. He likes to wait until after earnings before deciding to buy or sell this stock.