Potash (POT) Catches a Bid Amid Bullish Barron's Article
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Shares of Potash (NYSE: POT) are feeling a decent boost this morning on the back of Barron's article which was published last night. In the pre-market session, Potash is trading around $94.19, up more than 2% from yesterday's close.
The bullish article points out several possible catalysts, including the stock's 22% decline since June 11. Barron's calls this sharp slide "wildly overdone", noting that the move lower was intensified by a commodities-wide sell-off on Monday amid news that the World Bank cut its '09 global growth estimate from a decline of 1.7% to a decline of 2.9%.
Based on current price levels, shares of Potash trade at just 14x this years estimated EPS of $6.44, and at only 9x next year's $10 estimate. Barron's believes "there's room for more upside from here", arguing that once farmers return to the fertilizer market in a big way, drastically reduced supply levels will create a sharp surge in prices.
The Barron's article also uses the standard arguments for Potash: population growth and increasing fertilizer use in China, which is in contrast to the U.S., where fertilizer use is expected to fall by 20% this year. Barron's also likes Potash's $255 million in cash, saying that the company's clean balance sheet should be able to keep it afloat until the fertilizer market rebounds.
The bullish article points out several possible catalysts, including the stock's 22% decline since June 11. Barron's calls this sharp slide "wildly overdone", noting that the move lower was intensified by a commodities-wide sell-off on Monday amid news that the World Bank cut its '09 global growth estimate from a decline of 1.7% to a decline of 2.9%.
Based on current price levels, shares of Potash trade at just 14x this years estimated EPS of $6.44, and at only 9x next year's $10 estimate. Barron's believes "there's room for more upside from here", arguing that once farmers return to the fertilizer market in a big way, drastically reduced supply levels will create a sharp surge in prices.
The Barron's article also uses the standard arguments for Potash: population growth and increasing fertilizer use in China, which is in contrast to the U.S., where fertilizer use is expected to fall by 20% this year. Barron's also likes Potash's $255 million in cash, saying that the company's clean balance sheet should be able to keep it afloat until the fertilizer market rebounds.
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