Fertilizer stocks: 1 buy & 1 hold

Article Excerpt

The long-term outlook for these two fertilizer producers is bright as population growth prompts farmers to plant more crops. However, we prefer Agrium for new buying, as its retail operations help cushion it from volatile fertilizer prices. POTASH CORP. OF SASKATCHEWAN $43 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 858.7 million; Market cap: $36.9 billion; Price-to-sales ratio: 4.0; Dividend yield: 1.3%; TSINetwork Rating: Average; www.potashcorp.com) is the world’s largest fertilizer producer. It has six potash mines in Saskatchewan and one in New Brunswick. Thanks to a 30.4% rise in potash prices, the company’s earnings rose 73.6% in 2011 to $3.1 billion from $1.8 billion in 2010 (all amounts except share price and market cap in U.S. dollars). Earnings per share rose 80.0%, to $3.51 from $1.95, on fewer shares outstanding. Revenue gained 33.3%, to $8.7 billion from $6.5 billion. The company sold 9.05 million tonnes of potash in 2011, up 4.7% from 8.6 million tonnes in 2010. However, sales fell…