Still Smoking - Buy Some Pot!

Since writing my last profile and recommending the stock, Potash Corporation of Saskatchewan Inc reported good earnings and the stock has risen nicely. The stock price has also risen due to a recent event that may drive prices for potash even further. On October 26, Silvinit announced that it may have to suspend potash shipments due to the sinkhole created by last year's flooding of Uralkali's Berezniki #1 potash mine. This could cause a significant increase in potash prices. Good news for POT! In fact, POT moved over 9% last week on the TSX. That’s a pretty good buzz for investors.

Check-out Potash on Google Finance

Based on past agronomic studies in the U.S. Cornbelt region, failure to apply potash can have significant negative impacts on corn yields for soil regions deficient in potassium. Corn futures prices for the 2008/2009 crop year are above $4.00 per bushel - corn farmers have significant incentives to maximize crop yields. According to a Royal Bank of Canada (RBC) analysys, at current fertilizer prices, potash represents about 3% of a farmer's cost of growing a corn crop following a previous crop of soybeans. There is significant room for potash prices to move higher.

The expected rise in potash prices prompted RBC to boost their target price for POT from US$115 to US$145. RBC cites higher than historical futures prices for other major crops as well as corn and that all bodes well for the fertilizer business.

Put that in your pipe and smoke it!

DISCLOSURE: I own shares of Potash Corporation of Saskatchewan Inc. Always do your homework before buying a stock. Say no to drugs!

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Reap what you sow - with Potash

Well, as the saying goes, you reap what you sow. And the harvest this year has been good for farmers and is looking great for farming supply companies. As such, I’ve already dedicated two blog entries to playing the agriculture supply business. I recently profiled Bunge Ltd and back in September I covered a couple others, Ag Growth Income and Hemisphere GPS Inc, inspired by a newspaper article covering an agricultural investment conference. Recently, the legend himself (love him or hate him), Mr. Jim Cramer has also jumped on the agriculture bandwagon and recommend Bunge. Great minds think alike.

As stated before, the driving forces behind this play are: rising demand for grains in the developing world; use of crops for Ethanol and other bio-fuels; rising world population; unpredictable weather making the farming industry more dependent on technology and chemistry; and finally, less farming land making farming more dependent on technology and chemistry for greater yields. In short, a classic case of rising demand and a decreasing supply.

The big name in Canadian agriculture supply, especially fertilizer, is Potash, based out of Saskatchewan. I have been waiting to pull the trigger on this one for a while now, and just yesterday bought it at its lowest dip. I am willing to ride this one through-out the winter, and pick more up if it drops. As I stated before, this sector has got a bull-run going. So, like Bunge, buy this baby on the dips.
As mentioned before, farming companies are now flush with harvest dollars due to a great year featuring record crop prices (think corn!) and have money to spend on equipment and supplies. The next quarter for Potash and Bunge should reflect a bit of that. Good long-term upside. Plant those investment seeds and watch the dollars grow!

Check out Potash on Google Finance

FYI: Potash can easilly move up or down 3-5% in day - time your buy if you decide to pick some-up.

DISCLOSURE: I own shares in Bunge Ltd and Potash. As always, do your own research before buying a stock.

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Its All About Growth - Bunge Ltd

Back in September, I wrote about investing in agriculture supply companies. To paraphrase a quote from my earlier blog entry, some of the reasons that agriculture is booming are the demand for food products based on rising income levels in developing countries prompting an increase in the consumption of protein, the need for more grains to generate ethanol and worldwide population growth. "At the same time, the amount of arable land is shrinking, water supplies are under duress, weather is less predictable and yield improvements are slowing." In short, higher demand, less supply.

A company that will reap the rewards of this economic equation is Bunge Limited. To quote Google Finance:

Bunge Limited (Bunge) is a Bermuda-based holding company. Through its subsidiaries, the Company operates as an integrated, global agribusiness and food company operating in the farm-to-consumer food chain. It operates through three divisions: agribusiness, fertilizer and food products. These divisions include four segments: agribusiness, fertilizer, edible oil products and milling products.

Check out Bunge on Google Finance

Bunge's stock has run up recently, but there is still room to grow (no pun intended). Buy it on the dips! Big time! Orders for fertilizer accross this sector are massive going into the next several years. As farmers sell their crops at record price levels, they are flush with money. And they need ever greater crop yeilds. Buying into agri-business suppliers is a good investment. Bunge is a great company with great upside.

DISCLOSURE: I own shares of Bunge. Always do your research before you buy. Half a stock's worth is the sector its in.

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All About the Bling - Gold - Anatolia Minerals

Its been a while since my last posting – but I’m not gone. The Inspector is in this for the long run.

After a six-week run-up, gold has pulled back a bit. However, long-term the future looks good. As the US dollar climbed for a second day against the euro, gold prices dropped. The six-week rise of gold really was on the back of a weakened US dollar in the first place.

This morning (October 3), RBC Dominion Securities bumped up its gold price forecasts for 2008 and 2009 and added a forecast for 2010.

RBC Dominion Securities gold price forecasts:

Gold (US$/oz)

Estimate for 2007 = $670

Estimate for 2008 = $730

Estimate for 2009 = $760

Estimate for 2010 = $790

RBC Dominion Securities also bumped up their price target for three major gold stocks, and increased the rating for one:

Goldcorp (G) - US$30.24 - Price Target Increased

Outperform, Average Risk, Price Target: US$38.00 (was US$30.00)

Kinross Gold (K) - US$14.10 - Upgrading to Outperform

Outperform, Average Risk, Price Target: US$21.00 (was US$15.00)

Barrick Gold (ABX) - US$39.25 - Increased Price Target

Sector Perform, Average Risk, Price Target: US$44.00 (was US$32.00)

And now for a speculative stock, courtesy of RBC. Anatolia Minerals, which RBC rates top pick with a price target of $9.00.

Check –out Anatolia on Google Finance

RBC adjusted its price target to reflect the approaching construction phase. ANO shares are in a holding pattern as the company awaits the issuance of environmental permits that would allow construction of the Copler gold mine in Turkey to commence. Investors are likely also awaiting the outcome of legal proceedings in Turkey related to environmental permits for Eldorado Gold's Kisladag mine.

DISCLOSURE: I own shares in Goldcorp and Anatolia. I do not own shares in Barrick or Kinross. Always do your own research before buying a stock.

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