You are definitely onto something and you are right about what you have to say about Belarus and its sole ruler. Consider though the larger picture. Vladimir Putin, who characterized the demise of the Soviet Union as the greatest disaster to ever befall Russia, is intent on restoring that empire as reflected in Russian interventions in places like Georgia and Ukraine. Belarus plays ball with the Russians, unlike those who have been the subject of Russian invasions but that does not rule out some kind of eventual takeover. And when and if that were to happen, some type of amalgamation of the 2 potash companies could not be ruled out. Notwithstanding what Osipov said in the article, I don't doubt that there is coordination going on even without a renewed cartel arrangement. For the moment, things have simmered down between Russia and Belarus and the news cycle looks elsewhere for excitement. But over there, things can change overnight and there is not much anybody can do about it.
CFO Brownlee is at a conference today where he noted, inter alia, that expected growth in offshore markets and supply constraints at some of the company's competitors may allow POT to boost volume next year. For 2015, operational capability may be raised from the current estimate this year of 9.2 MMT to 10.5-11 MMT for next year. And this will require bringing back additional people previously laid off.
I tend to see the share price of POT as a function of revenues, earnings and future prospects and then to a much lesser extent the P/E ratio. So when revenues start jumping and earnings get back to $3.00 a share and prospects for future earnings and revenue growth brighten, THEN I can see $60 a share as having some chance of being realized. The problem is that there is nothing out there indicating even a remote chance that, say, we will see a more than 50% jump in earnings per share. Sure, folks bid up all kinds of tech stocks and bio stocks figuring something great might happen but AG is different. In recent years, most of the gyrations have tended towards the stock heading lower, especially with one disappointing quarter after another. None of this directionality is cast in stone. Things change and when they do, so does the direction of the stock. Another thing, right now, market sentiment towards agricultural nutrient stocks is decidedly negative which also does not help the share price.
Right now, if I had to guess, I would think there is some chance that the stock could get back to $40 within a year. My reasoning is entirely a function of current sentiments regarding potash exports going into 2015. If the optimistic scenario plays out, earnings and revenues will move up to support such a price. Throw in the possibility of another dividend hike and the end of major CAPEX spending and you have the recipe for a modest upward move. Ten years from now, we could be talking about a totally different story. As I remarked to another poster, I will be there, just pocketing my dividends.
Keep cheerleading. See where it gets you. I own more POT shares than you will ever have. I would rather tell it like it is than mouth faux positive garbage when there is nothing positive to say. I know exactly where this stock was in 2007; don't lecture me as I have held mine since then. You are the one who should get lost. When there is genuinely good news and I hear about it, I will post it which is what I ordinarily do. But I also post the bad news and there is more of it these days. How about the recent fires over at the POT mines that had miners trapped for a while? I let that go figuring it would be a short term phenomenon. This stock will only be trading over $60 in 12 months in the minds of magical thinking types like you who have no regard to what is actually happening in the market or the economics of what makes stocks tick. If I had shorted this stock I would have had it made but I still believe the thesis for owning these beaten down stocks is still valid. And as long as that is true, I merely look forward to clipping my dividend coupons which are huge.
I bought 700 shares 2 years ago so I now have 1,400 shares after the split. I just took a look and see that I am up 200% excluding the yield. I bought the interest in the LP figuring I could get a decent return in a low interest environment. I obviously did not expect this but I am naturally not complaining.
I tend to watch the ups and downs [mostly downs] on a daily basis; I guess I am a glutton for punishment. But I did something a few years ago intending merely to find another vehicle besides the AG stocks I own that would offer me steady income of 3%-4% but wound up doubling and nearly tripling my money aside from the yield. Mid-stream oil and gas pipeline partnership interests. So you see the irony. The AG stocks were purchased based on a thesis that these would be the growth stocks of the future but of course that did not pan out. And the energy partnership positions were purchased because they offered a decent yield in a low yield economic environment and wound up generating a surprisingly large amount of appreciation which I wasn't looking for. I guess that the old adage about it being better to be lucky than smart often holds true.
Yeah, Rich has been awfully quiet of late. But then again, he tends to comment when he has something pertinent to say. I doubt that he has bailed out although he is ahead big time given when he got in.
There are still a few left besides you and me. And from time to time, when they have something they feel like sharing, we hear from them. Perhaps some have given up insofar as the stock really is going nowhere. At least those looking for a quick buck are long gone. An article out this evening regarding the efforts of OAO EuroChem to become another potash colossus can't be comforting at all, particularly given that Clark Bailey, who oversaw the expansions for POT as senior VP, is the person OAO turned to to make things happen after the previous contractor dropped the ball. The article makes it sound as if this will turn into a food fight between the challenger upstart and the reigning champ, Uralkali but we will have to see about that. In the meantime, take care. I am not going anywhere.
The Financial Post has an article out today indicating that potash oversupply will plague the industry through 2020 and beyond. The negative commentary was prompted by a study that came out of the UK from a commodity research firm, CRU. Of course one might choose to temper one's enthusiasm for the study by recalling that not every potash project actually comes into being, particularly given the economics associated with obtaining an adequate return on invested capital as well as the problem of obtaining adequate financing. There is also the matter of where all the excess capacity resides. If as is likely it resides among the Canpotex members, one wonders just how negative that turns out to be.
POT's share price may not be improving but according to Patricia Mohr, potash sales prices are increasing and potash sales volumes are growing. Some of the highlights from the report are as follows:
Spot potash prices (FOB Vancouver) edged up from $302.50 in June to $310 per MT in July. Global shipments have rebounded significantly in 2014 and are likely to reach 58 MMT. Canpotex previously announced that they are sold out for this quarter; inventory remains significantly below its 5 year average. Granular prices in Brazil are looking to increase from the current $355-$360 MT to $380 given strong seasonal demand in Q3. China is now expected to exercise a large amount of optional tonnage from Canada before year end. A new contract price with China for early 2015 is expected to reflect a 10% price hike which would take it to ~$335 per MT. Uralkali believes global potash shipments will reach 60 MMT in 2015.
In view of the foregoing, we may see an upside surprise when the Q3 results are reported.
My reply was deleted. An article appearing on August 19th entitled "Potash supplies, oversupply scaring potential Jansen partners" says that "experts" are saying that $500/MT is needed to make investors believe they can recoup their investment and obtain a decent return.
According to CEO Mackenzie as per the news release of 8-20-2013, BHP is spending $800 million annually or $200 million per quarter as part of the $2.6 billion CAPEX to finish the excavation and lining of the Jansen project production and service shafts as well as to continue the installation of essential surface infrastructure and utilities. The expectation is that all this preliminary work will be completed some time in 2017. I haven't found anything to indicate that there has been a slow down or cut back of what was said last August.
I thought the really useful takeaway from the most recent commentary dealing with the proposed BHP business separation/spinoff was that this project requires potash to be selling at ~$500 per MT but we are nowhere near that at the present time which is why nobody is willing to pony up the scratch to partner with them and I don't blame those unwilling to put their capital into a JV like this one.
Compared to a lot of the other energy MLPs, this one continues to languish although a lot of analysts believe it holds a lot of promise. I made it one of my core holdings in this space but it has proven to have been my worst performer over the past 2 years. Not sure it makes a lot of sense.