Sunday, January 15, 2012

POT - Entry point

 Chart notes:
 Break from the downward trend line. Also an inverse head and shoulder pattern breakout. above 20 day and 50 day moving avg.
P/E: 10
Estimated 2012 Earnings: $3.9 Bil.
The world's population is expected to grow by 44 percent through 2100, which means an additional 3 billion mouths to feed. That math works in favor of Potash Corporation (POT: 44.74, 1.29, 2.97%) of Saskatchewan, the Canadian maker of a fertilizer component that helps increase crop yields. PotashCorp is the world's largest supplier of the potassium compounds commonly called potash. The company enjoys a strong competitive position in this concentrated industry: Potash is produced in only 12 countries globally, and a new potash mine costs about $4 billion to build.
Despite the company's dominance, its stock trades at 10 times its expected earnings for 2012, well under its 10-year average of 34. Ben Landy, equity analyst for T. Rowe Price, says many investors doubt that PotashCorp can get bigger or more profitable than it already is. But the long-term trajectory for potash consumption is undisputedly upward. To prosper, emerging markets need to increase the productivity of their land; farmland in parts of the developing world yields just half as much as U.S. cropland. China and India, already the world's biggest fertilizer consumers, each account for 7 percent of PotashCorp's revenue -- shares that analysts expect will grow.

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