Standing Tall with Chemical & Mining Co. of Chile

Oh, how the times have changed. It used to be relatively easy to pick any commodity stock, an oil service stock or whatever ag company, and feel good at night that the millions upon millions (as “The Rock” use to say) of people would consume it at an ultrasonic pace.

Hmmm. Fast-forward to today and we have no idea what companies might be around a year or two from now. Is that a scary revelation for most? Probably, or then again, probably not. I am constantly amazed when I hear many of the so-called financial pundits - even though I admire mostly all of them - say words of wisdom like 'after a big move up, sell equities to free up cash'. I guess that would be okay, however, as you're buying equities in incremental waves the whole way down from the beginning of 2008 then those words do not hold a lot of weight.

So what does the minor investor do? The one that holds a full-time job, has a family, a son who plays every sport, has a honey-do list longer then the earmarks on one of Nancy Pelosi's bills? You grin and bear it. You hang in there knowing that on the other side of this, it will turn. If you haven't sold now then what other convincing news of badness or economic tsunami do you need? I for one, with close to six-figures in unrealized losses, am not going to throw my hands up and give up. The so-called BOTTOM, when people just give up and get out. C’mon, if you rode this wave from year or two beyond and haven't sold out, are you?

No... Which leads me to Sociedad Quimica y Minera (SQM), one stock standing tall among many Jabronis (The Rock again). When I look at my portfolio, I see ATW down over 50%, FWLT down 50%, FCX, AAPL, NUE, DSX, and my beloved NUE all eyeing up the wonderful down 50% apple pie. But Sociedad Quimica - this little Chilean nugget - has performed amazingly.

Comparing SQM directly to its industry peers and the major indexes since October 2008, you would be hard pressed to find a better acting company. Granted, FDO and the like have done extremely well, but these can be taken down because of their run-up and potential falling out of favor scenario. More importantly, since October 2008 this individual stock has only signaled a sale alert (my interpretation of when to discard an equity based on its volume share growth with 1 or 2 corresponding factors) once. I can't say that about many others stocks. Just recently, in the beginning of February, was a sale alert. This isn't that disheartening considering it has been 4 months since the last one arose.

These facts are just technicals, but this company already announced "

year/year earnings growth of 170% for Q408, reporting quarterly net income of $120.3 mln ($0.46 per ADR) compared to the 2007 figure of $44.6 mln ($0.17 per ADR). Operating income for the fourth quarter reached $150.8 mln, 151% higher than the $60.1 mln recorded for the same period of 2007. Revenues totaled $397.9 mln, an increase of approx 29.9% with respect to Q407, when revenues amounted to $306.2 mln.

That's unbelievable if you believe what "The Rock" is cookin' (WWE quotes must be blamed on my son).

This article isn't to force or glorify SQM - it is, however a well-performing stock to consider for the eventual upturn this market will in fact make. There is good potential here - one just has to believe and not believe the pundits who say the world is going to implode. Stand tall with Sociedad Quimica.

Disclosure: Author holds long positions in FWLT, ATW, NUE, AAPL, FCX, DSX; No position in FDO

Comments

[Gravity404:]

I really like SQM and have been following it for a while; waiting for it to pull back some but it hasn't.

Question: Since POT owns app. 35% of SQM, it's a good play to buy POT in the mid to low 60s like it is? And get both??

Mar 09 09:03 AM

[constantnormal:]

I prefer quotes from Mr T to those from The Rock.

Mar 09 10:59 AM

[Matthew Dâ€...:]

Thanks for commenting. Owning both SQM and POT would not give you much diversification if you were to go that route why not look at MOO for a whole-sector play.

SQM is pulling back now as you can clearly see however,
the perfect entry point seems to be right around $20 if you can time stocks that well. This was the last buy signal from my indicators from four months ago after a rapid decline in share price.

As for POT alone, the indicators that I look at show a buy signal in the high $70's or low 80's at this point in time. These indicatiors could show to sell at some further point out but all indications are that this stock will continue to move up (that's odd in and of itself nowadays)so at this price looks very attractive.

Hope this helps.


On Mar 09 09:03 AM Gravity404 wrote:

> I really like SQM and have been following it for a while; waiting
> for it to pull back some but it hasn't.
>
> Question: Since POT owns app. 35% of SQM, it's a good play to buy
> POT in the mid to low 60s like it is? And get both??

Mar 09 08:35 PM