Grains Oilseeds

[trosh1]

Potash too lofty?

When you look at PE into the 60's for a large company, a person can think of it topping. I can see it getting to 250 if the market holds up. May lighten up then but will add with any large pull-backs. Long term (my investing preference) fertilizer (and potash) is good for years to come.

A observation by Geo12ar:

"This is a huge increase.
First of all the terms are FOB Vancouver which means that China absorbs the cost of transportation which I understand is around $125 so the real price is $700 when compared with India(comparable $675).

China as the largest customer used to get a giant discount and that has evaporated, In addition the quantity was reduced to 1M tons because others had already placed orders. That's why China paid more not less than India. This transaction is comparable
to a supplier of products to Wal*Mart that last year sold them product for $100 now asking for over $225 for the same exact item. I've never heard of such pricing power which shows
that the demand far exceeds the supply.

Moreover this is not a temporary issues(as might be the case with coking coal whose supply was disrupted because of weather
issues in Australia). I suspect that next year's demand will also exceed supply and prices will increase from current levels.

I don't know the exact numbers but if you assume that POT
and the others were selling for $200/ton and making $40/50 profit and now they are getting $700 for the same product-almost all that $500 is pure profit(probably an over statement their costs have probably increased somewhat-higher energy, royalties
etc).

Lets say conservatively pre-tax profits increased from $50 to$500.In the case of POT that's something approaching $6B extra pre-tax profits which probably translates into an increased EPS in the order of $10 per share(which IMO means the stock is a steal even at today's price).

Heck you don't have to believe me-just look at the chart.POT is now by market cap the largest co traded on the TSX. A year ago I had never heard of it or potash for that matter but I bought some shares at $50. Now it is $200. I've never seen such a
meteoric rise especially considering that it was not some start up speculative stock but an entity with a market cap was far in excess of $10B then.