commodity
In January 2005, we recommended fertilizer-maker Agrium Inc. as our Successful Investor newsletter’s “Stock of the Year.” At the time, the stock was trading at $19.51. By the end of the year, it had risen to $25.62, and investors who followed our advice saw a gain of 31%. Agrium’s positive outlook led us to name it The Successful Investor‘s “Stock of the Year” again in 2006 (it went on to rise 42.1% that year), and again in 2007 (during which it jumped 88.8%.)
Rising food demand and ethanol use pushed potash stocks higher
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Central Fund of Canada, $17.01, symbol CEF.A on Toronto (Shares outstanding: 238.3 million; Market cap: $4.1 billion) is a closed-end mutual fund that holds gold and silver bullion. It now holds 54.3% of its assets in gold bullion, 43.3% in silver bullion and 2.4% in cash. The fund has an MER of 0.38%. The units yield 0.06%. Central Fund trades at a 7.4% premium to the per-unit value of the assets it holds. We advise against buying closed-end funds at a premium, so we don’t recommend buying units of Central Fund. If you want to buy gold or silver, we recommend staying away from buying gold or silver bullion, coins (unless you collect them as a hobby) or certificates representing an interest in bullion. That’s because commodity investments like gold and silver bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance, storage and so on. You either pay these costs directly or through a premium built into the price of, say, a futures contract....
Brazil’s economy is the world’s eighth largest, and the largest in South America. Brazil is also the world’s ninth-largest oil exporter. Brazil’s economy stalled during the financial crisis, as global demand for the country’s commodity-based exports, including oil, slowed. However, it was one of the first emerging markets to begin a recovery, posting positive growth in the second quarter of 2009. The Brazilian economy could grow as much as 5.5% in 2010. To top it off, the country’s exports to fast-growing China have risen sharply. In 2009, China passed the U.S. to become Brazil’s biggest export market, accounting for 12.5% of its total 2009 exports. The U.S. accounted for 10.5%, followed by Argentina (8.4%), the Netherlands (5.4%) and Germany (4.1%)....
As a member of TSI Network, you’re likely aware that we’ve just released a new free special report, Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand. (If you haven’t seen this new free report, click here to download your copy right away.) We wrote Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand in response to rising investor interest in agricultural commodities. This interest is largely the result of BHP Billiton’s (symbol BHP on New York) $38.6-billion takeover bid for Potash Corp. (symbol POT on Toronto), as well as sharp increases in commodity prices, notably wheat.
Successful takeover could boost this potash stock’s fertilizer operations
...Get my latest buy/sell/hold advice on five commodity investments and my short- and long-term forecast for the fast-moving agricultural sector absolutely FREE
In light of the takeover bid and other recent changes in this fast-moving sector, I’ve written a new free report. Click here to immediately download my new free report, Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand....
Wheat prices have almost doubled, from a low of $4.25 per bushel on June 9 of this year to a recent high of $8.15. That’s mainly because Russia banned wheat exports to preserve its stockpiles in the face of a severe drought and widespread wildfires. Despite the jump, wheat is still well below its 2008 high of $13.34. Moreover, the U.S. and Europe expect to have large crops this year. And farmers are already planning to plant more wheat this fall to take advantage of high prices. That could lead to a glut of wheat next year. Wheat’s recent rise illustrates the cyclical and volatile nature of commodity prices. Still, agricultural prices should move higher in the long term, mainly because rising populations in developing countries will increase demand....
Market Vectors Global Agribusiness ETF, $44.20, symbol MOO on New York (Shares outstanding: 39.1 million; Market cap: $1.7 billion), aims to track the DAXglobal Agribusiness Index. The index includes 46 agricultural companies from around the world. To be included in the index, a company must be publicly traded, have a market cap over $150 million U.S., and meet certain minimum trading requirements. The index contains five major sub-sectors: agriculture chemicals and fertilizers (39.3%), agricultural product operations (32.6%), agricultural equipment (15.2%), livestock operations (10.1%) and biofuels, including ethanol and biodiesel (2.7%). Geographically, the DAXglobal Agribusiness Index is broken down as follows: the U.S., 45.8%; Singapore, 14.7%; Canada, 8.5%; Switzerland, 8.0%; Germany, 4.5%; Malaysia, 4.1%; Japan, 4.0%; Norway, 3.3%; Hong Kong, 1.8%; Indonesia, 1.8%, the U.K., 1.2%; and other countries, 2.3%....
Gold now trades at around $1,226.00 U.S. an ounce. That’s up 28.2% from $956 a year ago, but down from its all-time high of $1,261.00 U.S., where it closed on June 28, 2010. Gold’s recent gains have partly resulted from investor fears about the sovereign debts of European countries, especially Greece and Spain. That’s creating uncertainty about the strength of the euro. These fears are prompting more investors to buy gold and gold investments, because they believe investing in gold will provide them with additional security. We think gold could well move higher over the longer term, due to investor concern that low interest rates and large amounts of government stimulus spending will spur inflation. This could prompt even more investors to flock into gold —and drive prices up even higher....
MAJOR DRILLING $22.40 (Toronto symbol MDI; SI Rating: Speculative) (www.majordrilling.com; 1-866-264-3986; Shares outstanding: 23.8 million; Market cap: $532.9 million; Dividend yield: 1.8%) reports that its revenue jumped 46.6% in the three months ended April 30, 2010, to $97.4 million from $66.4 million a year earlier. The company earned $3.2 million, or $0.14 a share. A year earlier, it lost $4.6 million, or $0.19 a share. Its cash flow was $9.4 million, or $0.40 a share, in the latest quarter. Major Drilling expects to see continued strong results throughout 2010. That’s because gold is trading near all-time highs. As well, base-metal prices should move higher as the global economy and commodity prices continue to rebound. Major Drilling is still a buy.
TORONTO-DOMINION BANK $72 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 868.2 million; Market cap: $62.5 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.4%; SI Rating: Above Average) is expanding its commodity-related operations. This puts it in a position to profit from the rise in commodity prices that’s likely as the economy recovers. TD recently paid an undisclosed sum for Ross Smith Sousa Advisors Ltd., a Calgary-based firm that advises oil and gas producers on asset purchases and sales. Canada is likely to attract more foreign investment of all kinds in the next few years, due to our (relatively) strong national finances and the strength of the Canadian dollar. That’s especially likely in oil and gas, now that the BP oil spill has spurred demands for a stronger regulatory climate in the U.S....