Agrium (AGU.TO)

(Market Call Minute.) The whole Agrium, potash complex has really broken down. Potash prices are very, very weak.

Doesn’t hold this because of poor price momentum. Currently trading at 8X EBITDA and 12X PE with a 4% dividend yield. If you are looking for a bottom, be patient. You don’t need to catch the absolute bottom. Wait for price momentum to turn before entering. Valuation is a tailwind for you.

There is more diversification than POT-T so the stock has not fallen as much. We are right at about the point we were at for the February lows. If we hold this level then it may be an opportunity to accumulate shares.

Developing markets want a better quality of food and more of it, especially India and China. What is confusing in the short term is that potash prices have been weak based on currency weakness, import/export control, in that the government subsidizes the farmer to buy. The government has his own agenda, and sometimes the farmer can’t benefit to the extent that they should. Nitrogen, use for planting corn, is probably the most stable of the bunch. The real gem is its retail business in Canada, US and Australia. Likes that diversity that adds to the overall picture. Dividend yield of 4.27%.

Seasonal strength for agricultural stocks tends to run up through to the end of the year, and even January and February can be good months. Seasonal strength started on a positive note, but with the December peak, everything has started to roll over. This hasn’t quite broken support yet, but is not looking that favourable.

The world needs more protein and this company can help. Ranks fairly well and is very close to being purchased for his dividend portfolio. Growth forecast is a modest 6%. Relatively expensive PE to Growth. An interesting opportunity, but not a table pounding screaming Buy. Dividend yield of 3.7%.

(Top Pick Sep 4/15, Up 0.30%) It initially started doing okay, but then broke support. The technicals failed. It has been performing well over the last few weeks. It is strong until the beginning of January. This is the fertilizer stock to be in.

Likes agriculture longer-term, and of all the companies in that space, this is the one that she likes right now. Their retail gives them good diversity and tends to be less cyclical.

(A Top Pick Sept 4/15. Down 3.6%.) Seasonality is positive at this point in time, but after the Sept show, the technicals started to not do so well. During the last 2-3 weeks, the stock started to show some early signs of basing out. Seasonality is actually very positive until the 1^st week in January and the technicals are starting to look interesting. He would be a Buyer at this time.

(Top Pick Oct 8/14, Up 35.16%) He continues to like it. It is one of the better companies because you have the retail side as well as the commodity side. He has taken some profits in it when it hit over $140 because it was becoming too large a position. He is not adding to positions at this time, but is comfortable holding it.

(Top Pick Jul 31/14, Up 22.32%) It had a precipitous drop on India trying to renegotiate potash prices. He sees 23% earnings per share growth, 7.5% dividend growth. He’d be buying this name at these prices. He’d nibble away.

It is the most defensive of the fertilizer stocks because almost half of their business is in retail. It is more balanced amongst nutrients. It is a best of breed. This is a good name but it will be about a year and a half before you see that $130 level again. This is a good place to hide. People do have to eat. You have to continue to fertilize fields.

He is on the sidelines right now, but sold too early. It is thought that fertilizer still has more downside. Farmer confidence in the US is quite low right now.

Fertilizer stocks have a seasonal period that starts in late June and runs until the end of the year. The strongest of the sweet spot for a trade is October.

Usually at this time of year you get a nice little move up to September, followed by a down leg into mid-September. This then takes off right through until around the beginning of the year. You could use this for any of the major fertilizer stocks. It looks like it is set up for a typical seasonal trade coming into this year.