Agrium (AGU.TO)

A good space to be in, but there was a big downdraft today of 4%, a little bit more than the markets. You want to watch the level of around $122. Chart shows a little triangle forming, and you want to see that break out. He owns Potash (POT-T) which is a little more conservative. If you don’t own it, it is probably a good time to add. It is strong seasonally until the middle of the fall.

Fertilizer stocks differ a bit from the agricultural industry in general. They tend to do well all the way from June through to October. The 50 day moving average is currently higher. Looks like momentum is shifting positively, despite calls for a bumper crop in the US. There is a bit of a pause in October, so you could look to exit in Sept-Oct, and then get in again at the end of the year. This looks like a good pick here.

A good dividend grower. If you own, he would stick with it. Yield of about 3%.

There are some difficulties with the weather. The West is too dry and the East is too wet. This impacts these big companies to a certain extent. This one is very diversified. He wouldn’t chase it. He doesn’t think it is going to break away and take off on you.

(A Top Pick June 2/14. Up 41.82%.) Agricultural sector is starting to look more interesting. What is really interesting is the pop we have seen in corn in the past 1-1.5 months. That is always a good lead indicator for fertilizer stocks. Valuations are getting up there, so he sold his holdings 3-4 months ago.

(Top Pick Jul 2/14, Up 36.19%) It took a bit of a beating recently. He wishes they had split the stock. It is a well managed company. They have a range of products and they are diversified globally. The world is going to need this company to keep their crops growing. It looks like a good year for the farmers.

Prefers over the others. Has a great capacity to increase dividends going forward as well as a good yield now. They can increase their dividend a lot and only be at a 50% payout ratio in a couple of years. The new management is doing well.

She likes the fertilizer space longer-term just because of emerging market growth and increasing demand. This is a much more diversified one seeing that they have the retail business. Nitrogen is their main nutrient, which tends to be a nutrient that must be applied annually, primarily for corn.

He loves the sector long term. There will be 9 Billion people in the world in 50 years. This is a long term theme. It’s been a slow grind up over the last 5 years and he would buy close to the trend line for bottoms. If you buy it here, your outlook is not that good. Wait for another 10% pullback. Use the 200 day moving average. It is a long term play.

(A Top Pick June 11/14. Up 35.06%.) Nitrogen prices are moving and it looks like the retail side is going to have a good summer season for them. Thinks it will push through to new highs a year from now of about $145.

(A Top Pick June 2/14. Up 39.72%.) Thinks the fertilizer sector over the next couple of quarters is facing a few more headwinds. This is fairly valued now, so he no longer owns it.

This has been one of the better performing fertilizer stories. Has come off its highs recently, but it had a big run before that. Has earnings growth this year at about 13.5 times. Not super cheap, but not super expensive.

(A Top Pick April 28/14. Up 24.05%.) (In his 3 top picks, he was looking for companies that would grow cash flow and increase dividends.) The long-term case is that populations in developing markets are going to increase demand for protein and other food stuffs. This company’s major product is nitrogen, which is something that cannot be put off year after year. He is hoping for 18%-19% total return, including the dividend. Because of making great strides in finishing their CapX, he is expecting a free cash flow of $11 per share by 2017. Dividend yield of 3.12%.

Seasonality for fertilizer stocks runs from June all the way through to September, and tends to do quite well. The average gain for this company from June through September is about 10%. You want to enter into these more towards the mid-summer.

(Top Pick Jun 2/14, Up 34.94%) He sold because it was at the high end of the valuation and he sees tightness in the nitrogen markets.