PotashCorp (POT.TO) Buy, Sell or Hold

PotashCorp (POT.TO)

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COMMENT

This one did not run-up like Agrium (AGU-T) and because of that, it is doing its own thing. Trying to move above the 50 day moving average and the 200 is sloping downwards. In order for to have a breakout, you want it to go above 200 day moving average. If you get above $47, you are going to be okay.

DON'T BUY

Agrium (AGU-T) has done better because of its diversified space. There are 3 themes globally. 1) Agriculture 2) infrastructure and 3) consumers. These all stem from what is happening in developing countries. Long-term, he thinks the company is great but wouldn't purchase at this very moment.

DON'T BUY

She owns AGU-T because it is better diversified and has that wonderful retain that is finally bearing fruit. POT is much more dependant on potash. It is not a nutrient that you have to apply. You can skip a year. In the US they may have a horrible harvest for the third year. She is not that bullish short term, but long term it is a fantastic buy because eventually you have to apply it.

BUY

Model price $53.70, 19.4% upside. Prefers POT to AGU at this price.

BUY

He prefers Agrium (AGU-T). The recent short-term pop is going to turn into a longer one. With the drought there will be a lot of crop insurance being paid and they will be tempted to use more fertilizer. You can see $50 in 12 months. Well-managed.

BUY

Compared to Agrium (AGU-T) this is expensive. P/E ratio is 2 or 3 times higher. The basic problem with this stock is that potash and phosphate do not have to be applied every year. In the long term, with demand for higher protein, both companies are great long-term holds. (See Top Picks.)

HOLD

Agriculture sector is still in pretty good shape. Drought impacts farm production but fortunately for the fertilizer companies, their big usage in North America has already happened. Prefers Agrium (AGU-T) because of their diversification.

BUY

During the last 25 periods, it made a profit 21 times if you bought the stock right around the last week in June and held it until the first week in January. Average return was around 23%.

DON'T BUY

Fertilizer space has been somewhat hot recently. Fundamentals for this company are probably not as strong as the fundamentals for the nitrogen stocks such as Agrium (AGU-T). This company has been suffering from 1) lack of global demand and 2) earnings growth is not attractive.

BUY ON WEAKNESS

Likes this one but prefers Agrium (AGU-T) because of its more diversified base. International buyers have been delaying their purchases so there is an over inventory situation. The company expects a much stronger back half. Likes the agriculture play longer term.

PARTIAL SELL

Excellent long-term holding. Short-term problem is that it has had quite a little run-up in the last 2 weeks, over 20%. If you own, she would probably trim back a little at this point. Severe weather in the US is really causing problems with the anticipation of the corn and wheat crops.

TOP PICK

This is the perfect storm for this stock. June 23-Jan 11, up 23% an average 86% of the time since 1990. This year it is fascinating because it didn’t work last year. Everyone is taking up the inventory but no one is re-stocking.

BUY

$40 has been an area of support. The other positive is that we are just entering in to the period of seasonal support for fertilizer type companies. It could get back to the $53-$54 area if the market wants to cooperate.

HOLD

Fundamentals are good. Dominant position. Inexpensive historically. Not sure what the catalyst is on this.

BUY

Likes this one and if he were adding to a fertilizer stock, this is the one he would pick. This and Agriun (AGU-T) will do well in 3-4 years. Part of their short-term problems are the inventory situation in potash and phosphates especially from big countries like India which are delaying orders. (See Top Picks.)

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PotashCorp (POT.TO)