So while I'm cognizant of the hedge funds piling out of these names due to the "hey everything will be fine in 6 months and it's time to buy retail stocks" trade instead - I just cannot comprehend comparing a Kohl's to a Mosaic and picking Kohls, even at the low valuations of the retailers. Sorry, just not buying it even if those names do pop 30% in a week before selling off for a month straight as they've been doing for the past 6 months. The pricing power, visibility, and analysts still behind the curve is really no different from when I first came to this group last spring. So once the hedge funds get done liquidating their overleveraged selves, we might have lower prices, but the story will be even better...
Potash (POT)
- An RBC Capital Markets analyst upgraded shares of Potash Corp. of Saskatchewan Inc. on Monday, expecting the fertilizer company to gain from higher prices for potash.
- Both Belarusian Potash Co., a Belarus-based potash supplier, and Indian Potash Ltd. recently agreed to a contract potash price of $625 per metric ton -- up sharply from a previous price of $270 per ton. Pricing for the fertilizer has been supported by factors that include rising demand for ethanol, made from corn.
- Analyst Fai Lee upgraded the stock to "Top Pick" from "Outperform," with a price target raised to $250 from $195. That implies upside of around 73.3 percent from Thursday's $144.26 closing price
- Lee believes the recent Indian contract will set the tone for negotiations with other countries, like China. "We believe it is only a matter of time before Chinese potash prices approach global levels," Lee wrote in a client note.
- CIBC World Markets analyst Jacob Bout suspects the recent contract will cause a contract with China to settle sooner than expected and at a higher-than-expected price. "The Indian contract settling before the Chinese negotiations, unprecedented historically, is an indication of the current tight supply and demand fundamentals for potash," Bout wrote in a client note.
- Bout's new price target is $200, up from $155. He also raised his rating to "Sector Outperform" from "Sector Perform."
- Shares of Monsanto Co. jumped in early Monday morning trading, after a UBS analyst upgraded the seed maker to "Buy" and said a pullback in the stock price has made shares a better value.
- Monsanto's stock has slipped 25 percent from highs reached earlier this year, as investors have noticed that farmers are devoting less planting space to corn, and focusing more on soybeans and spring wheat, UBS analyst Chris L. Shaw said.
- Last year, corn prices surged on strong demand for ethanol and exports. Now, other commodities like soybeans have seen rising prices, as well. "We still see the lower corn acres impacting profits in Monsanto's seed business, but now see the risk of any weakness priced into the shares," Shaw wrote in a client note.
- Shaw upgraded the stock to "Buy" from "Neutral," and said there's still a good long-term opportunity for Monsanto's seed business, given a robust research and development pipeline.
Long Potash in fund and personal account
