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Agricultural Chemicals Hit New Highs

by: Steve Patterson June 13, 2008 | about stocks: MON / MOS / POT    

Steve Patterson

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After a month long sell-off that saw Mosaic Company (MOS), Potash Corporation of Saskatchewan (POT), and Monsanto Company (MON) dip from 4-15%, the agricultural chemical companies have rebounded to new highs within the last two weeks. Monsanto is still close to a new high with Mosaic and Potash striking new highs on Wednesday.

Corn continues to rally which makes the fertilizers and the seeds required for crop production that much more demanded. Corn is at $7, a new high and the use of crops for fuel is making agriculture follow crude oil in a very strong rally.

I like Potash the best of the three as analyst continue to upgrade their expectations for earnings in the current quarter, the next quarter, for the year and for the next year. In the current quarter, analysts have increased their views of the company’s earnings 20% over the past 90 days. And for the current year, analysts have increased their view of the company’s earning potential 43% in the same period.

Monsanto is more of a steady grower without the large increases in expectations. In fact, analysts are predicting a loss in the next quarter of 22 cents, with the overall year still being very profitable for the seed producer.

Mosaic has taken a slight dip in earnings expectations in the current quarter and the next quarter. Next year is where Mosaic looks to really grow. Analysts feel the earnings will be 76% better today than they felt about the same earnings period three months ago.

Agricultural Chemical companies, after a pause, are moving higher and now is a good time to add to positions in Potash, Mosaic, and Monsanto.

Disclosure: Author holds positions in the above-mentioned securities

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This article has 6 comments:

  •  
    Jun 13 08:04 AM
    short technical predictions..

    I am long AG stocks for the past two (2) years. Watched Jim Rogers prediction of the long AG rally. But the pricing right now for this stock get's me jittery !

    Dow has been down over 1000 points, technical charts for the indices are heading down except for the AG stock. Are we going to see a correction before the earnings >!!!! Highly likely we would be, but we have some strong support for this stock. Like Pot has a strong $200, and $190 support, AGU $90, and $82 support ..

    just my technical predictions..
    Reply
  •  
    Jun 13 01:17 PM
    Beware! Don't short the AG stocks or you will lose your shirt and a whole lot more.
    Reply
  •  
    Jun 13 02:26 PM
    Something extremely unusual happened yesterday and it was a paradigm shift. Read about it on this Seeking Alpha entry:
    seekingalpha.com/artic...

    Why would any one short agriculture unless he could not find anything to short or long? But PGM is even better actually.

    Reply
  •  
    Jun 13 09:23 PM
    What about AGU (Agrium), it has the highest increase of the the other potash companies.
    Reply
  •  
    Jun 16 06:15 PM
    My problem with this article is that the writer quotes analyst after analyst but names no one and offers precious little hard evidence to support his thesis. Please see "A Survey of Momentum Plays" by Michael Kahn in the current Barron"s for a more factual (and different) slant on this topic.
    Reply
  •  
    Jun 18 11:51 AM
    Your choices for "Blame for $4 gas" have left out any representaion of the Democratic Party, a wholly-owned subsidiary of the environmental movement and other unsavory groups. Who else has shackled nuclear power and prevented drilling new areas in the these past two decades?
    Reply
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