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.