Fertilizer. What a joke, right? Just as with Pets.com back in 2000, investors bought into another crazy bubble story about turning something mundane into something magnificent.
But wait a second. There is at least one slight difference. The fertilizer companies weren't just projecting future profits. They were -- scratch that, are -- making real money by the truckload.
Look at PotashCorp
Earnings this quarter exceeded those for the entire record 2007 fiscal year. Chew on that for a moment.
OK. Clearly, prices for the goods sold by this company, and competitors like Mosaic
Tulips are nice and all, but the world doesn't need 'em. Food, which can only feed the 6.7 billion inhabitants of this earth with the help of fertilizers, is a little more fundamental. PotashCorp's CEO probably doesn't need to point this out to anyone, but here it is: "[T]he need for food is not abating."
On second thought, maybe he does need to point this out. People have concocted all kinds of ideas about the fragile state of the world today. It's important to remember that agricultural cycles can follow a rhythm all their own.
I'm watching corn and soybean futures plummet here, which does argue for diminished fertilizer demand in the months ahead, but the self-correcting mechanism is important to recognize. I've noted before that global food stocks -- and by that, I don't mean Kraft
I liked PotashCorp at twice today's price, so you'd better believe I like it down here.