With shares of Potash Corporation of Saskatchewan (NYSE:POT) trading at around $39.94, is POT an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
As far as the stock goes, Potash has been dancing with mediocrity for several years now. This has been disappointing to investors since other companies in the industry have been performing well. However, the past doesn’t matter.
When it comes to the potential for Potash in 2013, a lot will have to do with how much you trust people. CEO William J. Doyle expects improvement in the coming year. There are several reasons for this optimism. One, China is likely to sign new contracts with Potash. Two, a deal with Israel Chemicals is possible. If this deal is finalized, it would increase the capacity expansion of Potash to 17.1 million tons. Three, demand for fertilizer is expected to grow on a global level with the majority of the demand stemming from India and China.
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If you believe that past results are the strongest indicator of future performance, then you will likely be bearish on Potash. This company has been shutting down mines, mining costs have increased, and offshore shipments declined by 300,000 tons last quarter year-over-year.
Let’s take a look at some more important numbers…