Access To Oil & Gas Adds To Their Appeal

Article Excerpt

Agrium and Nova use natural gas to make their products, and ready access to large gas reserves gives them a cost advantage over their competitors. However, only Nova is a buy at current prices. AGRIUM INC. $72 (Toronto symbol AGU; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 158.0 million; Market cap: $11.4 billion; SI Rating: Average) is a leading producer of fertilizers and crop protection products. The company uses natural gas to make ammonia, the basic ingredient in fertilizers. Most of Agrium’s facilities are near large gas suppliers in Alberta, which helps keep its input costs down. Agrium will soon close its fertilizer plant in Kenai, Alaska, since it couldn’t find a reliable source of natural gas for the plant. The company looked into a plan to convert coal to natural gas. However, Agrium feels the project’s $2 billion U.S. cost is too expensive. It earned $3.25 U.S. a share (total $441 million U.S.) in 2007. Requests for more information from U.S. competition…