Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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Booming Agricultural Markets Have
Propelled this Stock +208% in a Year |
Published:
March 16, 2008
Potash Corp. of Saskatchewan (NYSE: POT, $160.46) is the
world's largest producer of a fertilizer known as potash. Potash
is a potassium compound that is not synthetically produced, but
mined from a few key locations around the world -- Canada is a
key producer.
Prices for agricultural commodities are soaring. Corn prices are
up +135% over the past five years, wheat prices are up +250% and
soybeans are up +170%. One driver of that growth: surging demand
for ethanol.
Ethanol is produced primarily from corn in the U.S.; as the
government mandates greater use of ethanol, corn demand has
outstripped supply, forcing prices higher. In response, farmers
are desperately trying to expand production, growing corn on
larger tracts of land and reducing the proportion of their
acreage used to grow other crops. That in turn has tightened
supply for other grains and oilseeds -- almost all agricultural
commodities are now in tight supply.
And in Asia, rapid economic growth and significant population
increases are driving greater food consumption. As Asian incomes
grow, protein and meat consumption are on the rise -- livestock
require large quantities of grain as feed. This demand is a
second major trend powering growth in agriculture.
One way to increase crop production is to fertilize more
heavily. In addition, farmers can improve yields from marginal
farmland by applying more potash and other fertilizers.
Fertilizer demand is booming and supplies are tight; potash
fertilizer is among the most important types and is currently
seeing the tightest supply. As a result, POT has been able to
steadily increase the prices it charges for potash -- prices
have surged from around $200 per ton in January 2007 to around
$550 per ton by the end of February this year. In particular,
China's stocks of potash are dangerously low, and the country has
long been one of POT's most important customers. Of course, this
situation has been great for investors; the shares are up +208%
over the last year.
The firm also has a few key competitive advantages. First,
building new facilities to mine and process potash takes years
and millions of dollars in up-front investment. POT benefits
because it's the world's largest producer and has access to some
of the most prolific mines -- some of which can be ramped up to
produce more potash with minimal additional investment.
Trading at 19 times 2009 earnings estimates with a long-term
growth rate of +10%, POT looks expensive at current levels.
Nevertheless, analysts have consistently underestimated the
firm's growth potential in recent years and the strength of the
agricultural markets -- estimates of the company's long-term
growth rate are gradually moving higher.
Thus, +10% likely
understates the stock's true potential. Furthermore, the company deserves
a premium valuation given its near-monopoly of a key commodity.
Overall, POT looks like an outstanding play on strength in the
global agriculture market.
-- Paul Tracy
Editor
StreetAuthority
Market Advisor
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