CT Programmer

The Real Reasons Fertilizer Stocks Are In the Dirt

I think cstauffer is right. This market is NOT FUNCTIONAL. A fwd PE of 2.4? That sounds like a company circling the bowl ready to go into bankruptcy. Connoco Phillips less than 6. RIG at a little above 6. The dry-bulk shippers are all below 3. These aren't fly-by-night companies. We're talking great cash flows and ample growth. Sure, more potash is coming on line. And you know what will happen? More people in emerging economies will add more meat to their diet, which requires 8 times the corn feed as a vegetarian diet. So you'll see demand go up to match. Ag had an incredible run (and I cashed in on a lot of that over the last year with a 100%+ return on YARIY). We won't see that kind of run again. But long-term these (and most of the rest of the market) will bounce back to its normal 15-20 PE range. Even if their current profits get cut in half due to supply increase, I think from their current price they have 100-200% upside. Bottom-fish if you want, but I bought them yesterday and will just sit and wait.