Replies to Post #778 onRound Trip Options

Replies to #778 on Round Trip Options

06/05/08 7:03 AM

#779 RE: Ithildriel #778

Zacks Industry Rank Analysis Highlights: Agrium, CF Industries, Intrepid Potash, Mosaic and Potash Corporation of Saskatchewan
Thursday June 5, 6:00 am ET

CHICAGO--(BUSINESS WIRE)--Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week’s analysis includes as Agrium (NYSE: AGU - News), CF Industries (NYSE: CF - News), Intrepid Potash (NYSE: IPI - News), Mosaic (NYSE: MOS - News) and Potash Corporation of Saskatchewan (NYSE: POT - News). To see the Zacks Industry Rank and the trend in earnings estimates revisions for more than 200 industry groups, visit http://at.zacks.com/?id=3154.

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

U.N. Secretary General Ban Ki-moon told attendees of a global summit yesterday that world farm production needs to rise 50% by 2030 to meet demand. His remarks followed recommendations from a U.N. task force to end price controls and subsidies for biofuels. The task force also called for increasing aid and giving small farmers more support, such as seed and fertilizer.

Yesterday's speech added to a growing chorus of concern about global food shortages. Population growth, weather patterns, political mismanagement (e.g. Zimbabwe's Robert Mugabee), biofuels and global economic expansion have all contributed to the problem.

This is not a problem that can be solved quickly, but will require a great deal of resources. Part of the solution is, as the U.N. task force recommended, getting fertilizer onto more fields.

The high demand for fertilizer, as I have stated several times in this column, has resulted in strong growth for those companies that produce it.

Another Strong Earnings Report from a Fertilizer Company

Evidence of this growth was seen on Monday when Intrepid Potash (NYSE: IPI - News) reported exceptional growth for its first-quarter. The company, which went public in April, generated revenues of $84.4 million, a 75% increase from a year prior. IPI produced 3% more short tons of potash and realized an increase in its average sales price of 66%. Production of langbeinite (a specialty fertilizer) was also considerably higher.

Pro forma earnings totaled 27 cents per share, versus five cents a year ago. Quarterly estimates were not published for the company because of its recent IPO. One covering brokerage analyst does expect IPI to earn $2.05 per share this year.

Full-Year Profit Projections Keep Rising

However, several brokerage analysts do follow other fertilizer companies such as Agrium (NYSE: AGU - News), CF Industries (NYSE: CF - News), Mosaic (NYSE: MOS - News) and Potash Corporation of Saskatchewan (NYSE: POT - News). Within the past four weeks, consensus earnings estimates were revised upwards for all four stocks.

It is important to realize that the recent revisions were just the latest changes to forecasts. Brokerage analysts have been routinely increasing their profit projections on fertilizer companies for many months. For example, CF has been on the Zacks #1 Rank List (http://at.zacks.com/?id=4641) since last December, the longest current streak of any stock. POT was added to the list on Jan 2, AGU has been a member since Feb 12 and MOS made the list on Mar 11. (IPI is a Zacks #3 Rank ("hold") because of a lack of historical earnings estimates.)

To put this longevity in perspective, the Zacks Rank is based on earnings estimate revisions made during the past 60 days, as well as recent earnings surprises. Because the Zacks #1 Rank List is limited to just the best 5% of all stocks, turnover tends be high. Approximately 70% of the stocks currently on the list have held their Zacks #1 Rank for a month or less. Just 18 stocks that were on the list in March are still currently on the list.

The revisions are notable not only for their upward trajectory, but also for their impact on valuations. AGU, CF, MOS and POT are trading at less than 20x projected 2008 profits. These are low valuations considering that these companies should realize triple-digit growth in profits.

Nonetheless, supply limitations and higher demand should allow these companies to continue pushing through price increases while also maximizing production.

The interactive Zacks Industry Rank List allows you to see all of the companies, and their Zacks Rank, within more than 200 industries. See the list at http://at.zacks.com/?id=3208.

About Zacks Industry Rank and the Zacks Rank

Zacks Industry Rank is calculated by averaging the Zacks Rank for all covered companies within a given industry. The Zacks Rank is assigned to approximately 4400 stocks and ranges from #1 (“Strong Buy”) to #5 (“Strong Sell”). Both the Zacks Industry Rank and the Zacks Rank are quantitative indicators designed to cover periods of 1-3 months.

Since 1988, the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988, #1 Rank stocks have generated an average annual return of +32%. During the 2000-2002 bear market, Zacks #1 Rank stocks gained +43.8%, while the S&P 500 tumbled -37.6%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). Since 1988, Zacks Rank #5 stocks have underperformed the S&P 500 by 129% annually (+5 % vs. +12%). Thus, the Zacks Rank system allows investors to truly manage portfolio trading effectively.

Zacks "Profit from the Pros" e-mail newsletter offers continuous coverage of the industries and the stocks poised to outperform the market. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2564.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3:1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit From the Pros by going to http://at.zacks.com/?id=2565.

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Zacks.com
Charles Rotblut, CFA
Phone: 312-265-9352
Email: pr@zacks.com
Visit: www.Zacks.com

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Source: Zacks.com