Canaccord Adams Bullish on Fertilizer Companies

It had to happen eventually, since the Canadian brokerages do everything in their power to get more business in the agriculture space, Canaccord Adams has initiated coverage on no less than seven fertilizer companies. Three of them are majors [Potash Corp. of Saskatchewan (POT), Agrium Inc. (AGU) , Mosaic Co. (MOS)] while the other four are juniors [Athabasca Potash Inc.(ABHPF.PK), MagIndustries Corp. (MAAFF.PK), PhosCan Chemical Corp. (PCCLF.PK), and Potash One Inc. (KCLOF.PK)]

The coverage is all coming from analyst Keith Carpenter, who is very bullish on the sector — in fact, he has a "buy" or "speculative buy" rating on every company except Athabasca Potash, which he rates a "hold."

Put simply, Mr. Carpenter figures that the fertilizer market (specifically potash and phosphate) will be robust for "years" into the future as people in developing countries change their dietary habits. "Supply will not be able to meet the growth in demand over the next five years," he wrote in notes to clients.

If anything about Mr. Carpenter's coverage stands out, it is his ultra-bullish stance on PotashCorp. He has slapped an unimaginable price target on the stock of C$425 a share! That makes him the first analyst to break the C$400 barrier on PotashCorp., though a number of them are now well over C$300.

He wrote:

Given the production profile, our view on fertilizer pricing throughout our forecast period, the firm's low operating cost and growth profile over the same period, PotashCorp. should be accumulating significant earnings, we believe unmatched by its peers.

Mr. Carpenter reached that price target by applying a multiple of 17 times to his earnings per share target for 2009 of C$25.21.

Comments

[sliman]

It is the best sector. I own POT, AGU MOO and YARIY.

[Carl Martin]

I'm glad at least someone agrees with me!

[mythoughts]

Carl martin, I agree with you. Does that make you happy?

[resourceman]

Nice coverage of Potash. Glad to finally see a mention of MagIndustries (MAAFF.PK , MAA.V ) a Canadian company. This is the only Potash holding I have, with a nice low entry price of C$ 2.36. They have a 2,265 km2 , 25 year permit in the Republic of The Congo which overlies a massive salt deposit containing carnallite ( magnesium-potassium-ch... ). Proven reserves are 17.9 million tonnes of KCL , with total inferred resources of 1.07 billion tonnes ( 185.9 million tonnes KCL ). The resource is open in all directions and later core-drilling will likely increase it substantially. They plan to solution-mine the carnallite and process it into potash fertilizer in their Potash Plant which starts construction in 3Q08. Initial produstion is planned for 600,000 tonnes/yr , ramping to 1,200,00 tonnes. The plant is only 16 km from West Africa,s best deep-water port , Pointe-Noire , ROC. MagIndustries has already chosen a leading global marketer of Potash and other fertilizer products , Ameropa AG , based in Switzerland , to market all their exports. MAA.V is also planning to construct another plant to harvest Magnesium metal from the same salt brines. They additionally have another Division named MagForestry , also in Rebublic of The Congo, which harvests fast-growing eucalyptus trees for pulpwood log export. They are in the process of converting to wood-chip exports with their new chipmill. Trees are grown on their 68,000 hectare, 50 year permit , with 25,000 hectares still unplanted. If that,a not enough , they have a third Division , MagEnergy , which is in hydro-power and revamping an extensive power network in the ROC which also sells power to the copper mines in Zambia & The Democratic Republic ofThe Congo. This is obviously a buy, wait , & hope investment ,but everything I read about Potash says strong demand for many years.

[User 223471]

PLEAS REFER TO ANOTHER GEAT Ag STOCK: ICL.TA (some places known as:ichem.TA)

[The DarkKnight 77]

Agriculture is the way to go,last few weeks are proof of that!!


On Jul 10 04:30 PM User 223471 wrote:

> PLEAS REFER TO ANOTHER GEAT Ag STOCK: ICL.TA (some places known as:ichem.TA)