Insight on Goldman's Fertilizer Call (MOS) (POT) (CF)
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Price: $22.13 -1.78%
Rating Summary:
12 Buy, 20 Hold, 8 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 15 | Down: 12 | New: 12
Rating Summary:
12 Buy, 20 Hold, 8 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 15 | Down: 12 | New: 12
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Investors interested in fertilizer companies should consider picking stocks with exposure to potash (K) rather than nitrogen (N), according to analysts at Goldman Sachs.
"In the near term, we favor exposure to K as we believe fundamentals are near trough following 2012 destocking and production curtailments from key producers. We expect resolution of contracts with China/India in the next several months to set new floors for industry prices and drive improved volume momentum as key consumers come back to the market," said analyst Adam Samuelson.
Samuelson's view on nitrogen is much more subdued.
"Barriers to entry in the industry remain low and we expect new North American and other low-cost greenfield capacity to drive NA/global prices lower over time. We also see more risk to N prices in the event of a correction in corn following 2011-2012 outperformance," he said.
Investors who want to capitalize on Goldman’s fertilizer call can buy K companies, The Mosaic Company (NYSE: MOS) or Potash Corp. of Saskatchewan, Inc. (NYSE: POT), while selling N names like CF Industries Holdings, Inc. (NYSE: CF).
"In the near term, we favor exposure to K as we believe fundamentals are near trough following 2012 destocking and production curtailments from key producers. We expect resolution of contracts with China/India in the next several months to set new floors for industry prices and drive improved volume momentum as key consumers come back to the market," said analyst Adam Samuelson.
Samuelson's view on nitrogen is much more subdued.
"Barriers to entry in the industry remain low and we expect new North American and other low-cost greenfield capacity to drive NA/global prices lower over time. We also see more risk to N prices in the event of a correction in corn following 2011-2012 outperformance," he said.
Investors who want to capitalize on Goldman’s fertilizer call can buy K companies, The Mosaic Company (NYSE: MOS) or Potash Corp. of Saskatchewan, Inc. (NYSE: POT), while selling N names like CF Industries Holdings, Inc. (NYSE: CF).
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