As for the sector - the stocks are in the grip of momentum players, so short-term who knows what will happen. However, consider this - these stocks have boomed on the back of the "agriculture play" that has made so much money since 2006. Anyone taken a look at the chart of beans or wheat recently? They topped out in Feb and March and have plummeted since then, especially wheat. You had a classic buying fever in commodities in the first quarter. Rice riots, export controls, massive media coverage, prices and volumes exploding in parabolic fashion, and a trader going bust to the tune of $125 million in one day trying to short wheat futures. If that wasn't at least a medium-term top, then I'm a banana. IMO agrictulture and commodities in general are in for a rough 6-9 months. They became flavour of the month and now they need to fall, go into the doldrums, and bore investors/speculators out of their positions before any meaningful new bull trend emerges. This is not good news for the potash stocks. Now, for all I know pure speculation could carry POT and co further up for a while more, but with the underlying markets deteriorating, this is now an extremely high risk position at the very least, and quite possibly an outright money loser.
Michael Judd of Greenwich Consultants. He's enthusiastic about shares of chemical companies. The Wall Street Journal has ranked him as the No. 1 chemical-company analyst for the second year in a row, and he tops the Journal's overall list of stock pickers this year. He likes Dow Chemical Dow companies that produce agricultural chemicals, like Monsanto Monsanto CoMON 121.751 2.681 +2.25% NYSE Chemical companies on his list include Agrium Agrium Inc AGU 84.38 2.63 +3.22% NYSE Quote | Chart | News | Profile [AGU 84.38 2.63 (+3.22%) ], CF Industries Holdings CF Industries Holdings IncCF 128.88 4.81 +3.88% NYSE Quote | Chart | News | Profile [CF 128.88 4.81 (+3.88%) ], Compass Minerals Compass Minerals International IncCMP 73.77 1.22 +1.68% NYSE Quote | Chart | News | Profile [CMP 73.77 1.22 (+1.68%) ], Mosaic Mosaic Co MOS 119.13 3.71 +3.21% NYSE [MOS 119.13 3.71 (+3.21%) ], and Potash Potash Corp of Saskatchewan IncPOT 194.52 4.12 +2.16% NYSE http://www.cnbc.com/id/24852580/site/14081545
"We find the risk/reward still compelling and would be aggressive buyers of (Mosaic) and (Potash)," wrote analyst Edlain Rodriguez in a report. Rodriguez raised his price target by $50 to $285 for Potash Corp's New York-listed stock, and raised earnings estimates to $11.50 per share from $11.15. He raised Mosaic's target by $30 to $195. In his report, Rodriguez said it was a "matter of time" before Canpotex, which exports for Potash Corp, Mosaic and Agrium Inc (AGU.TO: Quote, Profile, Research), raised potash prices to $1,000 per tonne, a level already being charged by Russian competitors. Canpotex has already raised prices to Brazil and Southeast Asia to $750 per tonne, and has contracts with major consumers China and India for $650 and $625 a tonne, respectively. http://www.reuters.com/article/comp...mbol=MOS.N&pageNumber=2&virtualBrandChannel=0 Goldman said it sees 46% potential upside from The Mosaic's closing price Friday, and accordingly revised its 12-month price target from $165 to $195. MOS was added to Goldman Sachs' conviction buy list this morning
we live in world where fertilizer stock is worth $80 bil. insane. I'm thinking of buying some jan09 or jan10 200 puts here. what u all think?
Wheat has crashed and beans stalled since this thread but Corn looks pretty damn strong, reckon it could hit $10. Ag booms looks to have weathered the correction and heading higher, a bit like oil it is going further than most people thought. So who knows, maybe potash stocks will do the same? Personally I'd rather just own corn futures.
VALUATIONS June 20, 2008 7:35 AM EDT Merrill Lynch boosted its price target on a number of fertilizer companies today, saying prices for nutrients will continue to rise. Merrill Lynch raised its price target on Potash Corp. of Saskatchewan, Inc. (NYSE: POT) from $263 to $304. (Buy) Merrill Lynch raised its price target on Agrium Inc. (NYSE: AGU) from $115 to $155. (Buy) Merrill Lynch raised its price target on Mosaic Co. (NYSE: MOS) from $180 to $215 (Buy) Merrill Lynch raised its price target on Terra Industries Inc. (NYSE: TRA) from $61 to $64 (Buy) Merrill Lynch raised its price target on CF Industries Holdings, Inc. (NYSE: CF) from $190 to $240 (Buy) http://www.streetinsider.com/Analys...r+Stocks:+POT,+AGU,+MOS,+TRA,+CF/3760074.html