PotashCorp (POT.TO)

This company has done very, very well over the long-term, and interest in it has been resurging. Had a big run up, and then came off, and is beginning to get people’s attention again. In the theme of food, potash is a major component of fertilizer. Doesn’t think the food demand is going to abate. Worldwide food population is growing.

This has been looking pretty good, but is coming into some technical resistance. It needs an impetus to break through its highs. There will be some sellers because technical resistance is where people bought and they remember what they paid, and they want their money back. Be aware that you need positive news to break it through that stuff.

An industry that analysts have said would be a big growth area, because of a shortage of potash. However, it is remarkable how easy it has been for them to bring forth production when demand increases, so he wouldn’t look for a big increase in the underlying commodity. While the Cdn$ has fallen, it is still pretty rich against some of the countries that purchase potash. He would be inclined to Sell the stock.

Not a fan. It is a one product company. The market for potash is firming up. He would certainly hold it. It has broken out, so wait until it pauses. Energy investors are looking for somewhere else to invest and often end up here.

The group is higher here. Mosaic (MOS-N) guided upwards for the coming quarter. He prefers Agrium (AGU-T) because of their retail side. The weaker Cdn$ will help this company for the next little while.

In the short term this has been looking pretty good. Some of the money that stayed in the resource sector has flowed to fertilizers, as they seem to be viewed right now as the more stable resource part of the market. He likes this because of the declining CapX profile, and they will be increasing the dividend, which they have done for the last couple of years. Short term, it is anybody’s guess how that sector rotation goes, one way or another. There is a lot of volatility in the resource space right now, but longer-term he really likes this company. Thinks they will grow their dividends. They are stable and have low cost production and will be there for years and years. He owns this for the long-term.

There was a big drop in 2013 due to the cartel breakup. It might be a shorter term trade, but is scores very well. Dividend yield of 3.84%.

This typically does well from June until the end of the year and the beginning of January. However, that hasn’t happened because all commodities have come down a lot. If you own, a good thing to do would be to put a trailing stop loss on your holdings. Also, he would not hold it too much longer into January.

Agriculture has been rather choppy over the past couple of years. This one bottomed out in 2013 and started to recover, but is currently in a bit of a flat line. Peaked at around $41, so there is going to be some selling pressure. If it can break up through the $41, it could be good, however, you then have another set of sellers coming in at the mid-$40.

He trimmed some when the Russian mine disaster happened a few weeks back, when they had the sinkhole. The stock spiked and he Sold a little, but kept a core position. Very good stock. Has a nice yield.

Doesn’t see much upside with this, it would be about $44. Has a model price of $52.76, a 35% upside, but at his EBV +5 of $44, that is a real ceiling on the stock. If it fell back to $31-$32, that would be a magnificent Buy.

(A Top Pick Oct 17/13. Up 24.67%.) A year ago, everybody was worried about the cartel and the breaking of the potash cartel. A year later, here we are talking about the breakup of the oil cartel. In the meantime, their capital expenditures have fallen off quite dramatically and they are generating a lot of free cash. Almost a 4% yield.

The move relates to two mine floods in Russia. The second mine will not be brought back to production. You are only looking at 5-6% total return, however.

Chart shows a general downtrend from 2012. Wouldn't expect a lot of upside for the time being. Looks like a slowly eroding picture.

Prefers Agrium (AGU-T). This is one that one day the outlook is improving, the price is going up in one country and the next day something has gone wrong someplace else. It's really a ping-pong game. If they can keep their supply under control, this and Agrium are going to represent very interesting net free cash flow stories for the next 2-3 years. If you have a 3-year outlook, he doesn't feel you can go wrong with this.