Potash (POT) King Shows No Mercy
Thanks for 2 readers for letting me know of this article... this article states (as I've said before) why
Potash (POT) has a premium valuation over
Mosaic (MOS), simply the ability to expand production anytime soon. But I still think the valuation gap is too wide (
P/E Ratio by Stock), as increases in production will take a long time...(
Potash Expands Mine for $2 Billion).
As I keep saying, pricing power, pricing power, pricing power. While the stocks fluctuate 30% some weeks as people throw everything out - this is the most immune bull market I can find - which in theory should be the "safest" (outside of the panic movements). I'm a broken record on this group...
Also, sounds like Mr Doyle is open to a buyout offer. While that would be a nice 1x gain, I hope it doesn't happen for a few years - I'd rather have year after year of 30-40% gains in these names, rather than a one time 50% premium.
Potash King Shows No Mercy- Bill Doyle is the most powerful chief executive in Canada, maybe the world. Don't laugh. The CEO of Potash Corp. sells something everyone needs -- fertilizer -- and he and his peers can charge what they want.
- Even the mighty Chinese government has little choice but to accept the price of the two global potash-selling cartels: Beijing stared them down once, and blinked (asking for a US$20-a-tonne price cut, but accepting a US$25 hike in 2006-07). This time, the price will likely go up by more than US$100.
- The Chinese are playing tough in negotiations, but the potash makers have them over a barrel. And Mr. Doyle -- his company is the world's largest fertilizer maker -- has the temerity to brag about it. If the Chinese don't like his price, he'll sell to someone else.
- "We'll do better without them," he said yesterday, leaving Beijing with the "real political risk" of facing food shortages.
- Tens of millions of people are leaving poverty behind in China, India, Brazil and Eastern Europe each year, buying cars, homes and better food. Specifically, they are eating more meat, which requires more grains to feed the animals, which is why prices for corn and other basics have soared.
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