Potash (POT): Fertilzer 'breakout'

Posted Jun 6th 2008 11:55AM by Steven Halpern
Filed under: Newsletters, Canada, Commodities, Agriculture, Stocks to Buy, Potash Corp. of Saskatchewan (POT)

"Potash (NYSE: POT) scored a technical breakout by rising above $210," says technical expert Leo Fasciocco. In his Ticker Tape Digest, he says, "With earnings set to soar the stock now targets a move to $265."

"Postash, based in Canada, produces fertilizer. It produces phosphate and nitrogen from 12 facilities in the United States and South America. Fertilizer stocks have been strong due to rising profits reflecting strong demand for their products and rising prices.

"A long term chart shows an extraordinary bull market advance with the rising 170% the past 12 months versus an 8% decline in the S&P 500 index. Now, the stock has broken out from a seven-week flat base. The move carries POT to a new high on expanding volume.

"The stock's recent action showed aggressive institutional buying. The momentum indicator is solidly bullish and the accumulation - distribution line has hit a new high and compliments the price action. The key will be for POT to follow through on the upside with expanding volume.

"Strong demand for fertilizer products is sending POT's earnings soaring. This year, analysts project a 222% surge in net to $10.95 a share from $3.40 a year ago.

"The stock sells with a price-earnings ratio of only 19. We see that as low given projected earnings growth of 51% next year with net climbing to $16.56.

"Based on 2009 net, the stock has a p/e ratio of just 7. So, on a valuation basis POT should have more to go on the upside. Also, the stock is positioned for a possible stock split which could spark a move higher. Overall, POT remains 'hot.' We are targeting the stock for a move to 265 within the next few months. A protective stop can be placed near 205."

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Tags: agriculture stocks, AgricultureStocks, commodity stocks, fertilizer stocks, leo fasciocco, LeoFasciocco, pot, potash, potash stocks, steven halpern, StevenHalpern, thestockadvisors.com, ticker tape digest