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This article focuses upon 6 agriculture stocks with a leading market presence. My goal is to locate well-established business models that thrive during difficult economic times. Capital preservation is the principal focus. Agriculture stocks continue to break-out to 2011 highs.

Agrium Inc. (NYSE:AGU)

Agrium is amongst the industry leaders in agriculture marketing. Agrium is a retail manufacturer and provider of agricultural products worldwide. Agrium's crop nutrients include nitrogen, phosphate, and potash. Agrium has aggressively invested in growing their product offerings. Management has spent $5 billion over the past 5-years for numerous acquisitions.

AGU's 2011 agriculture forecast is positive due to decreased crop nutrient soil levels. On a worldwide basis, there has been a global shortfall in production due to inclement weather and decreased crop production.

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The stock has a 23.8% total annualized rate of return over the past 5-years. This compares favorably to the SP500's .1% return over the same time frame.

First Call and Standard & Poors projects a 9.5% total annualized rate of return for the next 5-years. Analysts project a $145.85-stock price based upon a 2016 earnings-per-share of $9.72. Although this is not the highest projected return in the ag space, a 9.5% total annualized return is ample return based upon the company's proven ability to produce shareholder value.

CF Industries (NYSE:CF)

CF's nitrogen fertilizer unit provides ammonia, urea, and UAN solution. CF's phosphate fertilizer unit provides diammonium phosphate and monoammonium phosphate. CF doubled their nitrogen sales capability with the April 2010 acquisition of Terra Industries.

CF has a significant scope in product offerings and transportation methods. CF Industries produces and markets nitrogen and phosphate fertilizer products. These products are sold to worldwide for agricultural and industrial customers.

  • Current Stock Price: $154.22
  • First Call and Standard & Poors' 2011 Earnings Data: $16.40
  • 5-Year Stock Price Projection: $334.67

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Based upon First Call projected earnings, a 15% total annualized rate of return is expected over the next 5-years. This is equates to a $334.67 stock price. The stock closed at $154.22 on July 15th. CF Industries is currently selling at less than a 10x PE multiple.

The dividend is negligible, 40-cents per year, but the annual revenues and earnings are significant.

CF, per page 7, has reduced their $3.4 billion debt level estimated on April 15th, 2010, to $1.2 billion on March 31st, 2011. The company is active with acquisitions, improving their product offerings, and increasing shareholder value.

Mosaic Co. (NYSE:MOS)

The Mosaic Company produces and markets phosphate and potash crop nutrients for customers worldwide. MOS manufacturers phosphate crop nutrients and feed phosphate for animal feed. It also produces and sells potash for use as fertilizers and animal feed ingredients, as well as in industrial applications.

The phosphates business unit was 70% of total 2010 sales. Mosaic is a retail manufacturer and provider of agricultural products worldwide. The company has a 6% debt to equity ratio. This will provide flexibility in terms of weathering any economic difficulties or acquiring new assets during opportune times.

Mosaic's 2011-2012 forecast is positive due to decreased nutrient supplies and increased demand for animal crops and human agriculture needs.

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The stock produced a 30.0% total annualized rate of return over the past 5-years. This compares positively to the SP500's .1% return over the identical time frame.

First Call and Standard & Poors project a 13.1% total annualized rate of return for the next 5-years. Analysts project a $136.00-stock price based upon an estimated 2016 earnings-per-share of $9.07.

Potash Corp. of Saskatchewan, Inc. (NYSE:POT)

First Call and Standard & Poor's project a 29.5% total annualized rate of return over the next 5-years. This assumes a $9.64 earnings-per-share in 2016. This will be a significant return based upon the proven total return over the past 5-years.

Potash Corporation has produced a 34.5% total annualized rate of return from January 31st, 2007 through July 15th, 2011. The SP500 produced a .1% total annualized rate of return over the identical same time frame. Potash has an optimistic projection for the remaining 2011.

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CVR Partners, LP (NYSE:UAN)

CVR Partners is a producer of ammonia and urea ammonium nitrate, or UAN, fertilizers. The company, on April 8th, began trading on NYSE. CVR Partners is 69.8% owned by CVR Energy (NYSE:CVI).

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Prominent investors purchased significant positions in the 1st quarter, 2011.

  • Dan Loeb, through his Third Point LLC hedge fund, indicates CVI as its second largest holding as of March 31st. Mr. Loeb is known for taking positions in event-driven and distressed plays.
  • David Tepper, through his Appaloosa Management hedge fund, purchased a CVI position. Mr. Tepper was previously a high-yield bond trader at Goldman Sachs. His hedge fund focuses upon distressed debt and catalyst driven stocks.

Agriculture products remain relatively high compared to years' past. UAN, during their IPO roadshow, was anticipated to distribute $1.92-per-unit. The 2nd quarter could have upside because ammonia and urea ammonium nitrate have moved up in price since the IPO paperwork was filed, per the weekly data:

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CVR Partner LP’s second quarter earnings conference call is August 4th. The second quarter earnings will be announced on August 3rd. Investors should expect second quarter data to reflect production did not officially begin until April 8th.

Terra Nitrogen Company, L.P. (NYSE:TNH)

Terra Nitrogen Company, L.P. (TNCLP) is a Master Limited Partnership (NYSE:MLP). The units are traded on the NYSE under the symbol TNH. The operating business is primarily a nitrogen production facility in Verdigris, Oklahoma. The company can manufacture up to 1.9-million tons of UAN and 1.1-million tons of ammonia. As an MLP, TNH has paid out distributions on a quarterly basis.

TNH paid $4.84 for the March 31st, 2011 quarter. This was due to higher UAN and ammonia prices. In addition, TNH's natural gas costs decreased by 19%.

Investors should remain aware of the legal options CF and TNGP pertaining to their ownership in TNH. Per page 13 of the SEC 10-Q:

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CF Industries clearly holds the cards in determining how long TNH remains a separate MLP trading entity under the symbol TNH. TNH share holders should note CF's structured cost per TNH share based upon the 10-Q.

Source: Agriculture Stock Ideas for Portfolio Growth