Dan Schmeidler

Agriculture: Are There Still Bulls in the Supermarket?

Tough call here, but I think it is a good idea to be taking a breather here from the ag group. Oil has dropped significantly, so has gold. POT, for example, reported phenomenal Q-2 results, but it is starting to hit resistance trying to break the $210-220 level. One might think the stock is cheap right now considering the company expects to earn an annual $9.50 - $10.50 EPS. That would give the company a P/E of about 20 at $200 a share. the question is if the market is willing to bid this stock up to let's say P/E 25 ($260 stock price) based on the company's current full year guidance. Maybe, but I think there is also a possibility that fertilizer products such as Potash might experience similar downward price pressures as many other agricultural commodities have recently.