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Compass Minerals International Inc. Message Board

  • iusaemployee3 iusaemployee3 Jan 17, 2007 12:17 PM Flag

    leveraged to potash?

    has anyone thought about cmp as a play on the growth in demand for fertilizer for animals and soy to feed china? the fertilizer companies are rocketing (check out POT), but somehow cmp is still a bit sleepy...

    just took a aposition in hopes that the 18% of revenue derived from potash is poised to grow... not to mention that American Funds is huge holder of the stock. also love that dividend.

    thoughts here?

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    • Potash is a major ingredient in most fertilizers and as I expect a major increase in corn production to sustain ethanol production, the use of fertilizers should also increase correspondly. CMP is a good long term hold that can weather good and bad winters.

      • 1 Reply to moamorphus
      • Not an expert, but I believe that potash is an ingredient in specialty fertilizers. Corn is basically a nitrogen consumer, so an increase in cron acres for ethanol would require more nitrogen use, not potash. Since nitrogen for fertilizer is made using large amounts of natural gas (also used in salt mining) the price of natural gas may climb quite high this summer, especially if we have a big heat wave (more nat gas use for electricity to run air conditioners). Throw a possible hurricane or two in the mix and nat gas could climb even higher.

        Again, I'm not expert.

    • given recent news on the corn crop.. do you use potash on corn fields???

      craig

    • Good point! It isn't ALL about de-icing. There are consumer products and, heck, even document storage. CMP may be a bit less one-dimensional than many think.

      With a 30% price appreciation in the past year and a half, it is also not ALL about the weather.

      This stock isn't going to "melt" even if they miss earnings. I would use a 10% price drop from here as a buying opportunity.

      Sorry, you asked about the fertilizer market. Thanks for your post. I don't have anything to add at this point other than to suggest investors ignore the "snow" posts.

      Love the dividend, too.

 
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