mcover

RIM, Mosaic Earnings Should Provide Upside Surprise

Vikram is absolutely right. What is also largely forgotten is that natural gas is the critical input for nitrogen fertilizer. Natty prices have risen sharply over recent months and the average analyst is using $7.25 gas prices in their models vs the $10 strip. Nitrogen fert margins are HIGHLY sensitive to nat gas prices. each 50 cent change in nat gas price impacts MOS eps by about 30-35 centes per share. The key point here is that while MOS will likely blowout this Q and pricing IS firm - models HAVE NOT been adjusted for higher input costs. Further multiples in this group are off the charts on peak earnings. Overlay that with a likely unwinding of the Q1 commodity trade and I think you have the udnerpinnings of a wonderful short opportunity.