PotashCorp (POT.TO)

(Top Pick Mar 11 /13, Down 18.67%) 4.3% dividend. They are ramping up their dividend growth. He originally got in too early. They are going to generate free cash. Cap X comes way down next year. Good fundamentals going forward.

A volatile industry. Shies away from the sector. He is long Mosaic and Short POT-T, making it a risk mitigation tool.

The question around this is what has happened fundamentally to the market for potash. At the end of July, there were some massive developments. The potash cartel was effectively broken. Economic demand-side has not changed but pricing power for companies has changed. Thinks this is a Hold short-term. Demand side pull, long-term looks fantastic. For a long-term investor, he looks at this as a buying opportunity.

Potash market has been in turmoil since the cartel had their differences. If you could predict when they get it sorted out, which they will, it would govern your attitude towards the industry. Longer-term he feels potash demand will grow well. He has reduced his target to around $36. You get a pretty good dividend, which will increase over time.

Sold off and had a 20% plummet at the end of July, beginning of August because of the breakup of the cartel between the Ukraine and Russia. Potash is not going to go below $300 a ton and you won’t see the Russians selling below cost for any length of time. Yielding 4.5%.

Would sell at this point. Dividend is safe but issue is earning consensus is still too high. Buy at $28. or possibly sell and get out.

Has gone through some rough times with what has happened overseas. Longer-term, he feels the demographics globally with a growing population, especially in the developing markets, will push the fertilizer companies upwards. In the short term he doesn’t know what will happen with the stock but thinks that supply will correct itself and prices will start moving back up again over time. Doesn’t see a major catalyst in the very near-term but longer-term it is a great company to own. 4.6% dividend yield is pretty safe.

(Market Call Minute.) Thinks the breakup of the cartel is extremely concerning. Stock could go down to $20.

Has no interest in any of the fertilizer stocks. Up until now, there has been cartel pricing in potash, which means prices have been artificially high and artificially profitable for producers. With the breakup of the cartel of the 2 producers in Russia and Belarus, there will be downward pressure on potash prices.

Potash industry has been sideswiped by Russian cartel dissolution. Don’t buy it here. Prefers AGU-T

From 2002 to 2008 in China, southeast Asia spot price ranged from $200-$300. In that time period, the demand went from 6 million tons in 2002 to 12 million in 2007 and now back to 10 million due to the price increase. India is a more interesting one. In 2003 to 2010, the rupees per ton went from 5000 to 12,000. Imports went from 3 million to 6 million tons so don’t worry about price increases, because it is made up in volume.

Feels there will be upside from here but it comes with a little bit rockier road because of the pure commodity exposure. With the news of the cartel in Russia exploding, there was a huge selloff and the downside from here is going to be rather limited but you have to be prepared for a little bit rockier road on the way up.

(Market Call Minute.) Would be more interested at $20.

Not a good time to buy. Market is overly optimistic. Market getting over supplied. China produces some potash. They don’t have to apply potash every year. You need nitrogen. CF industries is his preference.

Under pressure because of declining potash prices due to the collapse of the Russian cartel. The short-term Outlook will be lower potash prices so this will be good for this company. At these levels, it is probably somewhat washed out. They have very good assets.