nosivad

TD Newcrest: Teck Cominco Is Undervalued

Just read Greg Barnes log and agree totally. Prior to reading it I just bought in. Since I agree so wholeheartedly, he must be brilliant.

Short Idea: Terra Nitrogen

Enjoyed the article, "Short Idea, Terra Nitrogen", but pretty much disagree with its tenor. I'm long the stock and will buy more, but do agree that it's probably not wise to put all your eggs in this basket.

Several major points: First the ZERO debt sets it apart from any competition. Secondly, the ROE was reported as 98.08 for some time. One knows that would change...last week it did and is now reported as 117.2. That puts it in a different universe. The 100% production coming from one place is not to be ignored...I assume they have insurance, but profit would still take a hit. I assume Natural Gas will fluctuate and may go up, but as with any business if costs rise one raises prices. With no debt TNH can probably suck it up a little but I don't know why they should. I see no reason why margins have to fall. Their one product, nitrogen, is definitely related to the commodity world and its cycles. Corn may be at a high, as may be wheat or even soy, but the world is short food and this puts a prettyhigh bottom on the supply/demand equation. I doubt if Canada, Australia, Argentina, Brazil and/or The Ukraine can increase production enough to drastically alter the worldwide supply/demand situation.

My guestimate as to this years earnings is $16.48 and I note that jonnoarmo puts it at $16.35. To put it as the annal retentive wouldn't like to hear, that's close enough for government work. At the current P/E, that would value the stock at over $250. I certainly wouldn't want to be shorting it. Unless, as my pappy, from the mining camps of Montana might crudely say, "you want to lose your hat, ass and overcoat".

Gringito
QJ Associates
Gringito