Amid debt-ceiling-fueled market chaos Monday, Mosaic
For starters, operational capacity for both potash and phosphates was higher than expected, and the company had no trouble selling through it all, with days sales in inventory dropping from 54.1 to 46.5. In fact, the company is essentially sold out of both chemicals for the next several months, and the company expects global demand to continue outpacing any supply increases.
Mosaic plans to continue operating near full capacity and is making investments to further increase production, but it expects that global supplies of potash and phosphates will remain tight through 2012. And while PotashCorp
Growth drivers moving forward
Unfortunately, Mosaic's market-leading production includes a sizeable tariff that the Saskatchewan government requires Mosaic to pay to PotashCorp in the form of raw potash. Mosaic has recently brought the situation to court, claiming the original deal has been paid for and that the company need no longer make these payments, but the case hasn't been decided yet. If the court finds in favor of Mosaic, it would be a significant boon for the company.
Mosaic's recent spinoff from Cargill will also make it a more nimble company going forward, as it will allow the company to control its own destiny. In the conference call, management hinted that this would allow the freedom to increase cash distributions to shareholders. Mosaic already has a dividend, but like competitors PotashCorp, Agrium
These potential catalysts, combined with the company's operational excellence, make this stock a must-buy.
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