This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

WEBINAR: Fertilizer Stocks, Our Favorite Space to Trade

TheStreet Premium Services

A complimentary preview
of Options-Profits Previews

It was just about 10 months ago when Jill Malandrino and I put together an article on the fertilizer group, our best idea for 2012. We followed up with a webinar a few months later detailing our trade ideas (check out the link below). For the most part they did NOT disappoint, the group having performed far better than the SPX 500 and in the top 10% of other sector performers. Of course, this is not the sexiest group - this is not Apple (AAPL), Ralph Lauren (RL), Google (GOOG) or even McDonalds (MCD). However, we don't really care much about looking good (or smelling good for that matter -- fertilizers have a very heavy stench), rather it's about finding the best ideas that make us money. Fertilizer names have been strong in 2012 (and there is probably more to come before year end) and we look for that performance to continue in 2013.

The big news early summer of course was the weather. Severe drought conditions caught farmers off guard and crippled an already tight crop of grains. Corn levels ended at multi-year lows while soybean and wheat prices were elevated due to low inventory levels. The rains came later in the summer courtesy of some hurricanes but it was too late to make a difference. Farmers with any decent crop at all will get top dollar - corn reached near record highs over the summer. We expect to see farmers plant heavily into the 2013 season and hopefully they will see a better climate.

Demand for grains remains robust worldwide. China, India and other Asian countries consume more grains per capita than any region in the world. Feed is in enormous demand. Farmers will meet the demand but what will deliver the best crops is the addition of fertilizer. Historically, we have seen huge demand for fertilizer in the spring time, companies such as Mosaic (MOS), Agrium (AGU), Potash (POT) and CF Industries (CF) ramp production this time of year and coupled with the usual long term contracts from China and India have a good feel for pricing their product. Pricing for 2012 has been strong even as inventory levels were elevated early in the year.

2013 should see no different but what may change for these companies are inventory levels. In 2012 MOS and POT talked repeatedly about holding tight inventories after they were left with huge supplies when demand was light in the first part of the year. We expect this to keep pricing levels elevated and tight as lead times are shortened.

Key themes going into the end of the year and into 2013 will be India, China and application. Signed contracts with China and India won't necessarily translate into upward earnings revisions, but they could eventually lead to sharper decline in inventory drawdowns which could limit further price declines; and 2) farmers opting to fully maximize potash application despite soil tests that might indicate otherwise. And speaking of revisions and earnings, even at the levels most of the stocks are trading out now, there is still a good 15%-20% upside to consensus price targets as well as ours.

Our best plays for the next year include MOS, AGU and CF -- all three near annual highs so far. Jill and I will talk at length about these names, trade setups and other ideas during an exclusive webinar next week, October 10 at 6pm EST. Don't miss it!

As a refresher, here is the replay from our first webinar in May detailing our thoughts on the fertilizers. CLICK HERE FOR THE REPLAY.

OptionsProfits can be followed on Twitter at

Bob can be followed on Twitter at

EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

At the time of publication, Jill Malandrino and Bob Lang held no positions in the stocks or issues mentioned.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
Top Rated Stocks Top Rated Funds Top Rated ETFs