We all need to eat right? And for us to eat (at least somewhat healthy), we need some farmers to grow food for us right? Potash Corp is an integrated fertilizer and related industrial and feed products company that is poised for excellent growth over the next year or so. I would jump on this stock sooner rather than later. The buying level is decent between 93-97, as the stock has found itself sideways between 90-100 over the past few months.
Although debt is slightly higher than where I like to see it, EPS is expected to increase 226% this year, and 97% next year. Though it is predicted to slow in the 3-5 years following, I still think there is room for growth with this pick. It topped out at around 240 at the markets peak, and though it might not get THAT HIGH again, I would still expect this to trade in the 130-160 range over the next year or so, resulting in a possible 50-70% return.
POT pays a dividend currently of $.40, and they have cash on hand of $1.26, so payout ratio is favorable (Note: you do not want a company paying out more than they have in cash, they will run themselves into the ground doing this! It's important to pay attention to payout ratios when looking at dividend paying stocks).
Profit margin is EXTREMELY healthy at 37%, so we know POT is making money, and EPS is positive as mentioned before. The stock has already returned 27% YTD, so that may scare some people, but as you can see in the chart below, there is still some growing to do before we are at the upper right hand corner of the chart:
Other stocks of note that compete directly with POT are MOS and AGU. MON (which happens to be near my hometown and is also a stock on own) also competes in the agricultural space. They all have decent fundamentals and may be worth a look as well if you decide this industry might be a good investment tool for you.
Happy investing!
DH
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