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Agricultural Chemicals Return to Highs

Jun 12 2008

Agricultural Chemicals Return to Highs

    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 are a good time to add to positions in Potash, Mosaic, and Monsanto.

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