POTASH CORP. OF SASKATCHEWAN $43 - Toronto symbol POT

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 33.5% in the fourth quarter of 2011 due to lower demand from North American farmers. As a result, Potash Corp. has temporarily shut down three of its mines. That should help stabilize prices ahead of the spring planting season.

Even with the shutdown, the company still expects to sell 9.2 to 10.0 million tonnes of potash in 2012. That should push up its earnings for the year to $3.76 U.S. a share, and the stock trades at 11.4 times that estimate. The company also recently doubled its annual dividend to $0.56 U.S. a share. It now yields 1.3%.

Potash Corp. is a hold.

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