Potash (POT) CEO on 'Fast Money'

I did not see the show last night but Potash (POT) CEO appeared and here is a link

Below is the text; it hits on my comment about how leveraged this business is; the fixed costs are always there but incremental price increases almost all drop to the bottom line, hence you get extreme margin expansion and huge profit growth. Which we've seen. And will continue to. One of my favorite line items is gross margin - it is so key to profitable businesses and fertilizer just has the type of expansion you do not see very often. This is why the analysts are constantly wrong about their earnings estimates in this group.

Further as discussed in 'Potash King Shows No Mercy' it does sound like the CEO would be open to being acquired but at a very steep price. Considering how the mining names are consolidating and anything that is a natural resource is in short supply I could see the major potash names (potash needing to be mined) to be on the radar as buyout candidates in the years to come. Potash (POT) is the most expensive name in this space, but for a reason - they have the most excess spare capacity, but again it takes years to bring it online. Also have to like that share buyback, whenever the market gets silly and sells off these names arbitrarily.

Anyhow, in between the hand wringing about the end of days coming to fertilizer and this can't continue blah blah blah, all we see is continued fundamental strength and a hell of a macro environment for farmers.

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What’s the trade as agriculture stocks bounce after a rocky January? Find out from Bill Doyle, CEO of #1 fertilizer company Potash Corp.

Following is a synopsis of the main points made by Potash Corp. Chief Executive Bill Doyle on Fast Money.

You said in 2008 Potash gross margins will be 2.5 times larger than they were in 2007. How is that?

“It’s because we’re finally seeing leverage come into play,” says Doyle. “We have 75% of all the excess Potash capacity in the world and we’re bringing that excess capacity to market at higher prices.”

“Last year was our 4th record year and I think this year will be pretty good, too," he adds. "I the reason is that crop prices are up around the world. For example, for every dollar a farmer invests in palm oil in Malaysia and Indonesia they get back $9. Supply and demand fundamentals are very much in our favor. People don’t understand, yet, but there’s big demand out there.

What are you doing with all this money?
“We’re spending 5 billion over the next 4 years to bring back idle potash,” replies Doyle. “And we announced a share buy back.”

You’re buying back 5% of your shares, isn't that right?
“Amid this craziness we had in the middle of January when people said they wanted out of agriculture stocks, we bought back shares,” says Doyle. “(But) we buy back opportunistically.

Has anyone approached you about a buy-out?
I can’t tell you, says Doyle.

Traders, what do you think of this stock?
I like it, says Jeff Macke.
I think Potash could be a takeover target, speculates Guy Adami.

Long Potash in fund and in personal account