AGRIUM INC. $81 - Toronto symbol AGU

AGRIUM INC. $81 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $12.8 billion; Price-to-sales ratio: 0.8; Dividend yield: 0.6%; TSINetwork Rating: Average; www.agrium.com) owns stores that sell fertilizer, seeds and other agricultural products to farmers. These retail stores account for two-thirds of its revenue, and half of its earnings.

The company also makes fertilizers from natural gas at 14 plants in North America and Argentina, as well as other fertilizers such as potash and phosphate.

Good weather and high grain prices continue to spur demand for fertilizers. Moreover, low gas prices continue to cut Agrium’s operating costs.

As a result, Agrium earned a record $1.5 billion, or $9.52 a share, in 2011 (all amounts except share price and market cap in U.S. dollars). That’s up 106.6% from $730 million, or $4.62 a share, in 2010. Revenue rose 44.0%, to $15.5 billion from $10.7 billion.

The stock trades at just 8.2 times its forecast 2012 earnings of $9.87 U.S. a share. Agrium also recently raised its semi-annual dividend by 309.1%, to $0.225 U.S. a share from $0.055 U.S. The new annual rate of $0.45 U.S. yields 0.6%.

Agrium is a buy.

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