Position Update: MOS
Mosiac (MOS) is hitting all time highs this morning. There was some good fundamental news out on Friday (from the company’s 8-k), combined with this morning’s upgrade of MOS, POT, AGU, and CF by a major firm, and you get a +6% up day. At least, I’d like it to stay that way since I just bought it, and it looks like it will close above its previous high. Nice.
I dislike trading stocks whose share price, in the short/medium term, is 100% correlated with a commodity in short supply––especially, if you don’t have a commanding grasp on the supply/demand constraints of said commodity. It can be great, á la the PMs, metals, oils, but when that falters, you get slapped in the balls. That is why I was never a big fan of the the MONs, the POTs, the CFs, etc.
What’s changed? Not much. I still dislike the group due to my lack of intimate knowledge, and my main impetus for buying was the price, and that the AG complex held up well during November’s chopiness.
I tend to think this could pull back over the next few days, but it still looks like it’s heading towards 80.
Danny,
So what was in the 8K that you liked?
Not being a farmer, but winter season in the US, is that when you dig in fertlizer?
Point being, are earnings strong……getting weaker, or, weak getting stronger?
jog
December 3rd, 2007 at 11:49:32 amBasically, they’re saying it isn’t a “nat-gas short squeeze ‘05″ situation, but a more sustainable one demand issue. So, the supply/demand crux that I hate appears to be strengthening in their favor. I would suspect stronger earnings
“In 8-k slideshow, co discusses the recent surge in potash prices. Some analysts have fingered supply disruptions or threatened disruptions, but MOS says these minor or potential disruptions may have only sparked the rally–it is exceptional demand that is pulling prices into uncharted territory. Analysts are revising up potash demand estimates for 2007 as well as forecasts for 2008.
The most recent International Fertilizer Assoc survey now estimates that use will increase 6.5% to 28.9 mln tonnes in 2007 and projects that demand will grow another 5.0% to 30.35 mln tonnes in 2008–an increase of 1 mln tonnes the June forecast.”
December 3rd, 2007 at 11:54:41 amOh shit, even better. Just saw this. Though now I feel that today is a short squeeze that could be faded ST.
“Agrium’s (NYSE: AGU) buyout of UAP Holdings (Nasdaq: UAPH) for $2.65 billion is boosting other farm services retailing stocks today. Specifically, companies focused on chemical manufacturing of fertilizers and other feed products, like Mosaic (NYSE: MOS) and Potash Corp./Saskatchewan (NYSE: POT), are feeling the greatest upward pressure.
One of the largest fertilizer producers in the industry, Mosaic, is up almost 7% today, reaching a new 52-week high at $74.69. As the demand for crop-protection products has gained strength over 2007, shares of Mosaic have gone up almost 250% this year from its 52-week low near $20, set in January.
With one of the highest P/E ratios (about 52x) in the industry, at first glance, it appears that much of Mosaic’s growth has been priced into the stock. One the other hand, when comparing Mosaic with the largest chemical manufacturer, Monsanto Company (NYSE: MON), Mosaic looks relatively cheap. Mosaic investors are paying about 50x for EPS that are growing at about 300%, while Monsanto investors are paying about 50x for EPS that are growing at about 30%.
Besides the acquisition news, fertilizer producers are also benefiting from positive comments made Sunday by a Wall Street analyst, saying demand for fertilizer’s will grow following an exploration and mining boom in Saskatchewan.
Potash Corp./Saskatchewan is up nearly 5% today, and is trading around a new 52-week high at $126.91.”
December 3rd, 2007 at 11:55:53 ambtw, 300% growth is a bullshit number, IMO. That’s THIS YEAR, which has certainly been reflected in the price.
They have something like a 25% 5yr growth est. vs. MON at 40%.
I did sell about a third.
December 3rd, 2007 at 11:59:45 am[...] because I’m thinking it should pullback after 5 straight days of huge gains. If you remember, I purchased it last Friday, and have since enjoyed a robust 4 digit gain in the name, which I booked. I’ll gladly rebuy, [...]
December 7th, 2007 at 5:44:10 pm