PotashCorp (POT.TO) Buy, Sell or Hold

PotashCorp (POT.TO)

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BUY ON WEAKNESS

Was thinking if it fell back to $34-37 he would take a swing at it. Caller was asking about shorting it but he would not do that.

BUY

Market Call Minute: Tricky condition. Every day you hear of another mind being closed down somewhere.

DON'T BUY

There is a very close correlation with food prices and food prices have been moderating. Cutting production in some of their mines. There is no shortage of supply of potash. He would prefer BHP Billiton (BHP-N). Try to get it under $70.

BUY

Just recently announced they were shutting down 2 of their Saskatchewan mines for 6-8 weeks. This reflects the fact that they will produce to supply to keep the market in balance. Near-term we are seeing delayed demand for potash. Company thinks the market will be quite tight for 2012 with a pretty good selling season into the spring. In the long term, farm economics remains quite positive.

COMMENT

It appears that there is lots of supply in the fertilizer space. In fact people are talking about cutting back production. Seasonally, as you get through January you get into a better seasonal period. Technically it is challenged.

DON'T BUY

Technically not looking good at all. The last half of the year should have been a good period seasonally. It just bounced when it should have gone negative due to the end of the season. He would stay away from it at last for now. The trend is not there and the seasonality is just not there.

COMMENT

With any commodity stock, there is no telling where the bottom can be. Potash pricing has been fairly flat. There has been more and more M&A activity taking place in potash. With this one, you are playing a one commodity bet. As the potential to do very well, but also the potential to be weighed down for the time being.

COMMENT

Reason for weakness has been that inventories have been building up as the Chinese, Indians, etc back off from paying their prices. They have taken some production out of service. Likes it for the long term.

BUY ON WEAKNESS

Chart shows a down channel. Any up side move would probably create selling. We are at the end of this seasonal time of the year for the agricultural sector. Broke down through its 125 day moving average recently. Looks cheap, but will probably get cheaper and he would love to get it in the low $30's.

COMMENT

Fertilizer companies have moved into a period of unease. They have no expectation of rising potash prices but instead, falling prices. They have announced interesting cutbacks in production. Dragging down some of the other fertilizer stocks.

BUY

(Market Call Minute) Agri story is still in tact. Stock is cheap.

HOLD

Recent concerns about a slowdown in China. Have also been recent negotiations between potash groups and China and India for pricing and volume. Planning on cutting production by 7% in 2012, which is really a negotiating tactic. Good for the long-term.

HOLD

Fertilizer stocks tend to be pretty volatile. If you were going to own a fertilizer stock, it would tend to be Agrium (AGU-T). These stocks will all come back. It is a great industry with real demand for their product.

BUY ON WEAKNESS

Potash prices track very closely to food prices and food prices have been weakening recently. India, which is one of the largest countries for potash, refused about 35% of their normal quota when potash producers refused to lower the prices. There is probably also some tax loss selling. He has his eye on this one for a possible potential purchase but would prefer to see it in the high $30's.

COMMENT

Prefers Agrium (AGU-T). If buying, consider taking only a part position now and the balance on any pull back.

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PotashCorp (POT.TO)