AGRIUM INC. $73 - Toronto symbol AGU

AGRIUM INC. $73 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $11.5 billion; Price-to-sales ratio: 0.8; Dividend yield: 0.1%; TSINetwork Rating: Average; www.agrium.com) makes fertilizers from natural gas. It sells its products to farmers and industrial users through its more than 1,200 stores in North America, South America and Australia. The company’s retail outlets cut its reliance on volatile fertilizer prices.

Agrium also owns 26% of a fertilizer plant in Egypt; the Egyptian government owns the rest. This plant recently suspended operations due to growing civil unrest in the country. However, this plant supplied just 2% of Agrium’s 2010 earnings, so there would be little impact if Agrium is forced to write down the value of this asset.

Meanwhile, Agrium’s earnings soared to $293 million, or $1.85 a share, in the third quarter of 2011, up from $61 million, or $0.39 a share, a year earlier (all amounts expect share price and market cap in U.S. dollars). That mainly reflects its December 2010 purchase of 300 stores in Australia. Sales rose 52.0%, to $3.1 billion from $2.1 billion.

The stock trades at just 8.0 times Agrium’s forecast 2011 earnings of $9.00 U.S. a share.

Agrium is a buy.

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