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TSE:AGU

Agrium (AGU.TO)

WATCH
Doesn't rank well in his database. Year-over-year earnings down 91% and coming quarter expected to be down 88%. Last quarter had a 52% negative earnings surprise. Earnings expected to grow 72% in $2010 to $5.43 against a 10 PE, which is reasonable. Once corn/wheat start moving up things should start improving.
DON'T BUY
Trying to acquire CF Industries, contingent on this company dropping its bid for Viterra (VT-T). Usually with an acquisition stock price weakens because acquisition has to be paid for somehow. Agriculture businesses and fertilizer stocks are very expensive.
BUY ON WEAKNESS
Potash prices have been volatile. Problems with Chinese not signing contracts and Russians selling cheap to India. This one has a broader product base than potash. Next 2 years, fertilizer sales will be significantly up. Would add to it under $50 and in the high $40s.
PARTIAL BUY
6.5 billion people in the world and the only way we can get more acreage is with fertilizers. Fertilizers are carbon-based so the ability to manufacture is going to get hurt. This one is a natural fertilizer and is a great play on a long-term basis. Long-term hold so continue to add.
COMMENT
This one is tricky. Everyone is calling growth on fertilizers because farmers and China have to give in but it hasn't happened. Has exposure through retail through the US.
N/A
Does not know how long it will take. It’s a popular company. He’s not interested in it.
BUY
You should hope the bid for CF fails. The risk is that the company overpays. You are bottoming out in the fertilizer cycle. It is a good story and demand around the world will expand. It’s a 3-5 year play. He owns POT. He’s gone for the thing that it is harder to produce more of.
PAST TOP PICK
(Top Pick Oct 8/08,Up 38%) making progress on acquisition of CF. He looks at it as icing on the cake. He likes the diversity and this will add to it. They will weather the storm on potash.
BUY
There has been poor demand for fertilizer over this past year. Things have to improve in the next 6 to 12 months, as farmers cannot continue to delay putting on fertilizer.
BUY
Fundamentals look really sloppy at the moment. Application rates of fertilizer will increase next year. He likes them. Inventories are getting wound down. Less risk than for Potash. Agrium is more integrated.
COMMENT
He would say #2 fertilizer and fertilizer commodity company globally. In a slowing economy, fertilizer demand may wane but for the long-term it's not a bad position if you don't mind a very choppy ride.
PAST TOP PICK
(Past Top Pick Oct 16/08. Up 23.2%.) Still likes this one and is still buying. Hope they are successful in acquiring CF Industries. Also likes their retail and wholesale business. Wait until you see where the market is going before buying.
BUY
(Market Call Minute) Fertilizer play, retail play, nitrogen play, farm incomes – everything.
WAIT
One of your top agriculture/fertilizer companies. Demand is drying up for the time being so he sold his holdings. Can see it getting stuck for a little while. Pretty cheap at 9.9X forward earnings.
PAST TOP PICK
(Top Pick Sept 9/08, Down 2.5%) You can’t hold off on using fertilizer for too long, but it will be put off one more quarter. Hold onto it. Next quarter will be bumpy. Agricultural sector is lagging behind.
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