I researched POT all weekend. See it making possibly $8.00/share in 2008. Not sure for 2009 but could easily be $12/share.
Forward P/E for this year would be 20 and 12.5 for 2009.
Is this stock fully priced?
Opinions would be appreciated.
Editor's note: Tom Dyson, the new editor of International Strategist, left for Brazil last Friday. He's taking an agricultural tour of the country – which produces 60% of the world's soybeans. With booming food demand from Asia and pressure from ethanol production, soy prices are soaring – up nearly 40% last year. That means Brazil is going to see billions in foreign investment. Tom is reporting on the ground, so our readers will know the best way to profit...
The Soybean Highway
By Tom Dyson
Yesterday, I took four plane trips. I arrived in Cuiaba, Brazil, at midday. Then I got on a bus...
I'd been on the bus for about three hours, when the driver punched the brakes and stopped the bus. The man standing in the aisle almost fell over. A truck in front of us had also stopped. The bus driver and several of the passengers got off the bus and joined the truck driver. I watched the driver bend down and peer under the bus, as if he were studying the front axel.
But, there was no problem with the bus. In Brazil, whenever the traffic stops, everyone gets out and stretches their legs. This was a routine traffic jam. Up ahead, two soybean trucks had collided and blocked the southbound lane. Soybeans had spilled all over the road in a pile.
An hour later, my bus was overtaking another soybean truck when the bus engine cut out. The lights died and air conditioning went silent. The passengers all sat up in their seats and looked forward. We coasted to a stop. Five more soybean trucks rocked the bus as they charged past in a tight convoy. Everyone got off the bus again. It was raining. This time the driver crawled under the bus. I heard tinkering, then he reemerged, got back into his seat and started the bus. The passengers got back on, and away we went...
This is BR-163, the Soybean Highway. Everyday, 1,000 soybean trucks head south from the fields of Mato Grosso to the Atlantic ports using this road.
They return with fertilizer.
It took my bus seven hours to cover 177 miles. I'm guessing soybean trucks take at least five days to make the 2,758-mile round trip to and from the Port of Santos.
BR-163 is not a safe road. The potholes swallow motorcycles. The vegetation at the side of the highway is so thick you can't see the road signs. It costs $77 to ship a ton of soybeans from Iowa to Shanghai, according to Fortune. It costs $202 to ship a ton of soybeans from this area of Brazil.
And now, Brazilian law lets truckers drive only eight hours a day. And a truck needs two drivers. This will increase trucking costs even more.
I noted the prices of gas at stations on the way and converted them into dollar per gallon. Gasoline costs $6.50 a gallon. Diesel costs $4.62 a gallon, and ethanol costs $3.73 a gallon...
Today, I'm visiting the largest slaughterhouse in Latin America and a brand new biodiesel refinery... I'll file more dispatches later this week...
Not sure if we get a significant pullback below 150. The is a momentum stock and the 'news' is that the world may experience a famine. In addition, India and China are now demanding more, more, more! So the food shortage that did not exist last year is now worse than the oil shortage. Therefore until TECH turns around analyst will continue to dump money into AG, Water, Oil. Once we have some type of financial recover, housing recovery, or tech recovery AG should move down.
Your job is to GUESS when that will happen! Tomorrow, next week, next year, next decade, next century. The analyst will have you believe next century!
With POT's product , the demand is so great by the world, I will not wait. Each day we are moving higher and higher. You will never loose, if you are looking at long-term. These fertilizer companies will be in giant demand for many years to come.
Go POT, MOS and CF.
I am long, but I wouldnt add here. I think we will see 130-140 in the next week or two.
fundamentals are good, but too much is driven on momentum and "IBD crackheads"
Wait for a pullback -- there have been 3 or so good pullbacks in the last 6 mos on POT. Believe me, in this mkt environment and the current volatility we are experienceing, there will be more pullbacks/buying opportunities.
I am a Cdn farmer, I will give you my opinion from the farm. Good ag prices rarely last more than 18 mos. We are closing in on a yr, depending on what you qualify as good. Whenever prices go up we hear about the hungry world etc. There is no shortage of food. there is a shortage of people who can afford it, and the price is being driven up by ethanol, which in my opinion is a political game, not an economic or environmental one. A big question is what will your next President want to do with it?
Potash is used by many grain farmers, big for potatoes. Nitrogen gives the biggest bang for the buck, and while everyone is saying how farmers have lots of $ now, our costs are soaring, and we always need to cut costs wherever possible. I think there could be a big demand for N this yr, N is made of Nat gas, nat gas prices and shares of producing co's has been low...
Finally, if there is a big weather problem, remember that drought stressed crops don't use up much nutrients, hence less fertilizer used the next yr in those drought areas. Fields too wet can be leached, so use more the next yr.