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TSE:AGU

Agrium (AGU.TO)

BUY
Likes this with or without the C.F. Industry acquisition. Undervalued relative to Potash (POT-T) by 20%-30% on NAV and about half the PE multiple. Thinks they will eventually acquire C. F. Industry.
COMMENT
Fertilizers. Well diversified. Shareholder friendly and increases their dividend. Very disciplined approach. Very strong return on capital. 0.23% dividend.
PAST TOP PICK

(A Top Pick May 16/08. Down 41.15%.) There are better places to be now but it is fine.

BUY
Nice company because it is vertically integrated. Everything from production of a broad base of fertilizers to distribution and sale. Very good buy of a solid company with very good prospects going forward.
COMMENT
Agrium (AGU-T) or Potash (POT-T)? Potash is strictly potash and Agrium has potash as well as chemical fertilizers and seems to be doing a little better. Potash’s cash flows are a little bit under pressure. Both stocks on the long run have a great upside potential.
BUY
Likes for the long term because she is positive on fertilizers. Expecting an increase in demand for fertilizers as emerging countries industrialize. Potash, phosphates and nitrogen have been on a decline because farmers have stopped buying. Brazil has settled on their potash pricing for the next year so volumes are starting to pick up.
BUY
Believes that food prices are likely to go higher as diets improve in the emerging markets. This one has been depressed because of its attempted acquisition of CF Industries. Once that is completed it could very well move ahead.
TOP PICK
Jan $54 call option. Speculative play. If we have a strong turn-around on the economy, these commodity stocks could take another run.
SELL
Wouldn't be surprised if this pulls back into the low $40’s. This stock is up against some pretty stiff resistance. Fundamentally, the industry is facing potentially substantially lower fertilizer prices.
COMMENT
Very involved in a lot of potential M&A activity. The whole agricultural trade is a macro trade that is for real. The problem is that this is a little pricey given where potash commodity is trading at right now. Waiting for a move in the basic commodity and will own them in the future.
PAST TOP PICK
(A Top Pick Aug 18/08. Down 37.76%.) Still a Buy.
DON'T BUY
Likes the basic materials space. Agriculture products have probably been the biggest laggards in the group. Numbers are quite good and seem to be managing their pricing pretty well. He would prefer to see the levels breaking out above what they where in the spring before he bought.
TOP PICK
(A Top Pick Aug 5/08. Down 36.58%.) Still looking to acquire CF Industries, which would make them #4 in the business. Quarterly report showed very strong retail and wholesale sales. Advanced technologies is fine and the rest of the stuff is weak. Next year's PE is 7X.
PARTIAL BUY
Earnings were very good and beat consensus by quite a bit. Likes the stock as a core holding. If you don't own, establish a small position at these levels in case it doesn't come back and buy more if it does.
DON'T BUY
Problem with playing fertilizer stocks directly is that commodities can be extremely volatile. There are other ways to participate in the agricultural sector. (See Top Picks.)
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