The only cheap fertilizer company
Last week fertilizer stocks all surged in unison after the world's largest mining company BHP Billiton (NYSE: BHP) tried, and failed, to acquire the world's largest potassium company Potash Corp. (NYSE: POT).
Right now, there's only one company in the sector that's still (relatively) inexpensive. More on that company in a minute…
First, a little tooting of my own horn: just over a month ago, I recommended you pick up shares of another fertilizer company (now the second largest) -Mosaic Co. (NYSE: MOS).
Here's what I said on July 22:
What the Potash Buyout Tells Us
The bidding war for fertilizer company Potash Corp of Saskatchewan (NYSE:POT) is getting very interesting. Last week, the company rejected a $34 billion buyout bid from mining giant BHP Billiton (NYSE:BHP). BHP countered by saying it would make the bid a $38 billion hostile bid, which means BHP takes its offer directly to the shareholders.
To counter this move, Potash Corp has been in talks with other companies to see if they can get the buyout bid higher. China's Sinochem and Brazil's Vale have been mentioned as having interest. And Potash's board is already saying that a "superior offer" is expected. That's good, because Potash Corp. currently has a market cap of $44 billion, and rising.
Now, this buyout process is interesting in its own merits. As a company, Potash is a cash cow, throwing off $1.42 billion in net earnings and $2.58 billion in operating cash flow on $4.9 billion in revenues. One might look at the forward P/E of 19 and conclude the stock was expensive. But when you consider that earnings would pay for the buyout in less than 20 years (based on forward estimates), maybe it's not so expensive.
Pushing on a String
Our discussion of the GM IPO has been timely: the company filed with the SEC for its IPO yesterday. Now, we can answer some of the looming questions.
First of all, it sounds as though GM will not issue new shares, but rather simply sell more of the existing ones. That means the current common shareholders will not be wiped out. It also means that individual investors will be able to buy GM shares on the first day they are available.
The world’s most profitable agriculture company
I hate falling into the trap of simply responding to the hottest news headlines - because very few people get rich by reacting to headlines and pulling the trigger on investments based on "hot" trends in the market.
At this point, computers can wipe the floor with most any day-trader, so if you think you can buy yesterday's news and still eke out a profit, you're probably wrong.
In the past couple weeks agriculture has been the hot topic on everyone's mind. First, fires in Russia caused wheat prices to double in less than a month as Vladimir Putin banned Russian wheat exports. In sympathy, many other crop commodities rose in price as well. Then yesterday, BHP Billiton (NYSE: BHP) the world's largest mining company, put in a failed bid to buy Potash Corp (NYSE: POT) the world's largest fertilizer company.
How Do You Feel Abou the GM IPO?
You've no doubt heard about the wildfires ravaging
Russia's countryside. These fires have
seriously impacted Russia's wheat
harvest, and have sent wheat prices soaring around the world.
This morning, mining company BHP Billiton (NYSE:BHP) offered $39 billion, or $130 a
share for the world's largest fertilizer company, Potash Corp of
Saskatchewan (NYSE:POT).
