I agree that there is more upwards potential on POT, MON, CF, etc. However, POT's parabolic upswings are a bit unnerving to say the least. P/E ratios don't necessarily mean a thing in general terms. You are comparing tech P/E ratios back in 2000 with AG P/Es of today. Such cross-industry analysis of this ratio is known to be useless. The fact that CF and POT correlate strongly (even intraday) also leave some questions unanswered. These are structurally different companies with different earnings. If fundamentals (earnings) direct chart movements, then this points to the fact that most AG stocks have detached a bit from their fair value... just a thought. Also, didn't POT have a pretty high P/E right before the drop to the 200 MA?
Yes, POT I believe had the highest; however, they have a special "corner" on the potash market, hence the willingness of investors to pay more for greater future earnings. No doubt these stocks had a huge run up on a weakening dollar and then had a natural pull back on a strengthening dollar. Keep in mind the OP is a long term investor in these stocks. Do you really think a long term investor should sell fundamentally sound stocks during a bear market and a natural pull back? I don't.
Another pertinent fact to consider: historically, July and August are the lowest performing months for the fertilizer stocks; year after year they've pulled back during these months, then resumed their gradual trend up over time.
another difference I see between fertilizer and tech stocks is that people fundamentally demand to eat. they don't fundamentally NEED to buy movies online or search for stuff on yahoo. I definitely agree that I am bucking the market here, a big no-no. I refuse to take my lumps on this though. just out of sheer orneriness.
This is the same argument that was put forward here in 2006 about housing related stocks such as homebuilders and mortgage finance companies. People need to live somewhere right?
The difference between mortgage finance companies in 2006 and 2007 and fertilizer stocks is that fertilizer companies aren't selling their products at a large introductory discount to thousands of financially unstable farmers in exchange for them locking into long term adjustable rate contract, then raising the price 50% the next quarter and wondering why they aren't getting paid.
I've heard and read all of the arguments before, but a bubble is a bubble is a bubble. You can make the same arguments for just about any company out there. I remember healthcare and drugs having the same argument then there was PG and GE which had the same argument. I guess it was Mark Twain that gotten sunk by the railroads and one could argue the need for railroads. All of them still managed to dump somehow. A bubble is a bubble is a bubble. Dont get fooled by P/E or simply because there seems to be a need for it. Oh look, POT is down again today another couple percentage. It will keep losing a little more each day until that conference call that doesnt seem to meet the street's expectations and then 20-30% down is a definate probability. I say it gets back to 2005 pricing.
I posted this chart of ATI yest. I know it's not a fertilizer stock, but just about all of the commodity related stock charts look similar. This one fell out of bed this morning.
If you look at the charts for AGU, CF, POT, etc, you will see that they bounced off their 200-day SMAs, are retracing their pullbacks, and are forming higher lows and higher highs. CF is the strongest in this regard (having retraced half what it lost from its highs) and my guess would be the fact that it has the lowest P/E ratio.