Mosaic (MOS): Growth in fertilizers

"Agricultural commodities have been hurt in the recent turmoil," says growth stock expert Stephen Leeb. In The Complete Investor he looks at Mosaic (NYSE: MOS). a world leader in fertilizers.

"Mosaic has been decimated in price despite reporting record earnings. The company is the world's second-biggest producer of fertilizer components and the leading producer of potash.

"It's also the largest maker of processed phosphates, which gives it a lot of leverage to the rapidly growing markets of China and Brazil, and is an exclusive marketer of 1.2 million metric tons of nitrogen products.

"Since its high in June, the stock has lost three-fourths of its value and now trades at just 3 times next year's earnings. The sell-off came despite Mosaic's highest-ever earnings ($2.65 in the latest quarter vs. $0.69 a year earlier) and expanding gross margins (38.1% vs. 26%).

"The apparent reason was that those record earnings were slightly below some analyst estimates. Also, investors perhaps feared that farmers wouldn't be able to obtain credit to buy fertilizers.

"Once all the added liquidity puts these fears to rest, and given that the worldwide inventory of soybeans, corn, and wheat is forecasted to keep declining into 2009, we think demand for Mosaic's products will be strong.

"Long-term investors should use any temporary softness in fertilizer component prices as a great buying opportunity for Mosaic's shares."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.