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TSE:AGU

Agrium (AGU.TO)

BUY ON WEAKNESS
In terms of the long term look at these fertilizer providers, you are looking at land that requires a steady fertilization. So it is a steady stock. When the market drops it will follow the market, and that is the time to buy.
BUY
We are heading into a long-term food crisis. Secondly, there is maximization of fields that have already been planted. Also inventories of grains are at an all-time low level.
COMMENT
Prefers Potash (POT-T), which has a much more attractive price chart technically.
TOP PICK
Agriculture is very popular and he likes this one because it is one of the cheapest. Just made a very substantial acquisition. The price of potash, etc. is going up very fast. Trades at less than 10X EBITDA.
SELL
(Market Call Minute.) His model price is $51.29, a -15% differential.
TOP PICK
This is a fertilizer nutrient theme. There is a demand to improve acreage yields, not only in North America, but globally. There will be a continuing demand. We are just in the early innings.
COMMENT
Tied into fertilizer and everyone is loving corn. You need the nitrogen that they make. It's in the right space and the right time. Half their production comes from Alberta, which has cheaper gas. Trading around 14X earnings. If you believe in the ethanol story, this is in the right space.
SELL
He held this name last month, but kicked it out of its portfolio and made a lot of money. The model price went south because the balance sheet went up substantially with their acquisition and they are not going to earn enough to improve the model price. There is a decrease in the model price to $49.79, a -24% differential.
BUY
Very bullish on the agricultural area.
DON'T BUY
Both Agrium (AGU-T) and Potash (POT-T) show spikes. There is a lot of overcrowding in these stocks. They have had quite a run and they need a break.
BUY
(Market Call Minute.) World grain prices and the consumption of beef continue to rise.
TOP PICK
This one is riding on the great agricultural and harvesting boom. Brilliantly run. Also has a great potash deposit in Saskatchewan. Just acquired a rival in the US.
TOP PICK
PE ratio is 15X next year’s earnings compared to 24/26X for Mosaic (MOS-N) and Potash (POT-T). Thinks we are in for a very long cycle. Likes the acquisition of United Agri-Products (UAP), which puts them up to 15% position in the retail market share. (All 3 stocks should be significantly higher in the next few years.)
COMMENT
Just announced the purchase of United Agri-Products (UAP) giving them a bigger distribution. It appears there is going to be a very strong market for fertilizer going forward. Trading at 10X cash flow, which is not cheap.
BUY
Loves fertilizer stocks. Clearly what will drive the demand for fertilizer stocks is the long-term growth of protein-based diets in the emerging markets.
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