Do you know the risks associated with your stocks?
Stocks come with a good amount of uncertainty. If they didn't, we'd all have matching portfolios that are happily invested in all of the same stocks. But of course, the potential returns would be close to nil in that case, so having differing opinions is a key factor of our financial system.
If you ask two members of our Motley Fool CAPS community about the same company, chances are you'll get different opinions. Some will say a given company is the best; others will disagree. Each opinion has its merits, so taking the time to see both sides of a story will help you become a better investor.
With that in mind, we've gathered myriad investing insights from our CAPS community, where 110,000-plus CAPS members have contributed picks and commentary for more than 5,500 companies. Today, we'll look at some of the CAPS bull and bear cases for fertilizer and feed company Potash Corp. of Saskatchewan
CAPS Rating (out of 5)
Source: Motley Fool CAPS, as of 8/5/08.
Bull case for Potash Corp.
Potash Corp. is the world's largest producer of potash, producing 23% of the world's supply. Potash is largely used as a source of potassium ('potassium-oxide') which is a key macro-nutrient (nitrogen, phosphorus, and potassium) required to produce fertilizer. Readily abundant sources of potash are concentrated in relatively few areas in the world and Potash Corp. controls 1/4 of it. They also have large interests in mining and production of all three macro-nutrients.
According to the 8K filed by [Mosaic
(NYSE:MOS)], potash and fertilizer demand are increasing despite record prices, while China will discontinue exporting resulting in reduced global supplies. This and [PotashCorp] are closely tied to grain prices which are (I believe) permanently inflated to current levels by the ethanol debacle.
CAPS members bullish on Potash Corp. are also bullish on:
Bear case for Potash Corp.
Over valued in agricultural sector. Great growth but bad valuation today compared to others in sector. I'm bullish on [Agrium
(NYSE:AGU), Terra Industries (NYSE:TRA), Andersons (NASDAQ:ANDE)] today and bearish on [Intrepid Potash (NYSE:IPI), Potash]. Neutral on [Mosaic] based on comparative valuations and each company's earnings potential the next 5 years.
This stock is flying high, too high IMO. The momentum is hypercharged and smells of Krispy Kreme. Try [Intrepid Potash] for cheap pot.
CAPS members bearish on Potash Corp. are also bearish on:
- First Solar
- Research In Motion
What's your take on Potash Corp.? Do you side with the bulls or the bears on this one? Plant yourself over at CAPS to voice your opinion -- it won't cost you a penny -- or add your thoughts in the comments box below.
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