Canaccord Adams Analyst: Attractive Entry Point for Potash Corp.

Canaccord Adams has reiterated its Street-high C$425 price target on shares of Potash Corp. of Saskatchewan (POT) after the fertilizer giant announced that its board of directors has approved an increase to its share buyback program. The company hiked the ceiling from 5% to roughly 10% of the public float.

In a research note, Canaccord analyst Keith Carpenter said:

Potash Corp. is taking advantage of the recent market downturn to re-invest its cash at depressed prices. The increased buyback underscores the company’s long-term potential and continued strength for the fertilizer market.

While acknowledging that Potash shares will likely remain volatile and trade in line with general market sentiment in the near term, Mr. Carpenter said the current price presents an attractive entry point.

He said:

We continue to believe that the company’s growth profile and earnings will be unmatched by its peers.

Comments

[Jackal:]

Would be a great entry point if the future fallout doesn't give us a real depression. In that case, it would look dumb. Not many houses, condos or cars being bought these days. We're not at a market bottom yet in my view; not nearly! And many are looking at late 2010 for the bottom.

2008 Sep 16 02:25 PM

[cashking:]

I think that when times are tough, food is a relatively cheap way to feel better. With corn/soy prices still high, there's going to be a big crop next year (recently the cornbelt has been hit by flooding from Ike). These fert stocks will jump when Chinese contracts start to roll in this fall. Since China incorrectly tried to play the price-waiting game last year by under-ordering potash, they will be a key driver of higher contract bids.

The only short-term concern is more commodity sell-offs to raise capital from failing American financial's (although that didn't happen today). Even oil is quickly approaching an arguably oversold position.

I'm long POT, IPI.

2008 Sep 16 04:35 PM

[Socialism c...:]

Jackal - future fallout? Might not buy a new car, but I still want to eat. As Cashking points out, Chinese contracts are going to roll soon; additionally, much of the "correction" has been liquidation by hedge funds in need of cash. Also, POT's mine strike has put doubt in the equation...but apparently distribution of product to industrial markets has not been hurt. Crops yields are gonna be down with flooding, etc. - we can look for crop prices to stay strong...and that means continued strong demand for fertilizer. The world is growing and people will eat.

2008 Sep 16 04:55 PM

[el zorrow:]

GET REAL....NO REAL BIG DIVIDEND......GROWTH MAYBE...STAY AWAY...BEAR MARKET....BUY A BANK...SEE HBC OR LYG FOR A DECENT DIVIDEND....WHY BUY SOMETHING THAT OFFENDS THE SHAREHOLDERS WITH NO REAL DIVIDEND...CHECK OUT THE PE ON AGU....ACCUMULATE SLOWLY IN A BEAR MARKET.

2008 Sep 17 01:00 AM

[legmaker:]

I like all the potash producers. They are all attractive at todays prices.

2008 Sep 18 08:03 AM