Roundup is one of the world’s leading crop protection products. This has been a huge project for Monsanto in scope and in terms of financial investment. This expansion will help boost Roundup production capacity by 20%.

Monsanto is a leading global provider of agricultural products. The company’s pipeline of agricultural biotechnology products stands unmatched in the industry.

However, the intense competitive environment and Monsanto’s huge dependence on a few large customers pose a risk. Nevertheless, a healthy balance sheet, along with a robust pipeline of new products and the continuous growth in the seeds and genomics segment, appears encouraging.

For fiscal 2010, the Zacks Consensus Estimate is $3.26 per share, compared to $3.78 in fiscal 2009. Monsanto expects full-year 2010 EPS in the range of $3.10 to $3.30. Over the past month, the Zacks Consensus Estimate has fallen from $3.29 to $3.26.

Five out of 16 covering analysts have lowered their estimates. The Zacks Consensus Estimate for fiscal 2011 has also gone down from $4.44 to $4.41 in the last 30 days as 2 out of 16 analysts have lowered their estimates, while only 1 has raised his estimate.

Monsanto remains a Zacks #3 Rank (‘hold’), as we believe that its healthy balance sheet, along with a robust pipeline of new products and continuous growth in the seeds and genomics segment, will drive both near term and long-term growth. We also maintain our long-term recommendation of Neutral.

Zacks Investment Research

(MON) Monsanto Announces Expansion

So let’s look beyond the Russian tantrums and the fact that the Olympic Village is leaving the picturesque city of Vancouver $1 billion in the hole, and get to what might be in it for us, the average investor. How is Canada these days? Surely our neighbor to the north has a choice stock pick in it somewhere? Sure it does.

Anyone with a passing knowledge about Canada knows that it is home to extraordinary natural resources — oil sands, natural gas, gold, lumber, fishing and farming. It is, after all, one of the top ten economies in the world. But the time to buy Potash (POT) or Kinross Gold (KGC) or Agrium (AGU) was a couple years ago — those stocks all have a Zacks #3 Rank these days.

Research In Motion (RIMM) is perhaps Canada’s most well-known stock, though the BlackBerry is not exactly synonymous with the Maple Leaf. Besides, Research In Motion is another stock that came back down to earth during the crash of late ‘08, and hasn’t managed those lofty heights since — and has lots more competition now, too. RIMM is a Zacks #3 Rank stock, as well.

Believe it or not, resource-rich as Canada is, three-quarters of its workforce — and two-thirds of Canada’s GDP — is in the Service sector. Surprised? Time to get past it. Clearly, Canada is more than the U.S.’s Cap — it’s the U.S.’s kid brother, economically speaking.

OK, so where’s the Zacks #1 Rank Canadian stock? Here it is: Rogers Communications (RCI), Canada’s top cable TV and wireless company. Its Wireless business has a 37% market share in Canada, as well as 44% of Canadian Internet cable operations. Revenue growth was up 4% year over year in the latest quarter, and it beat Zacks’ estimate by more than $100 million, to nearly $3.1 billion.

Rogers Communications’ solid fiscal first quarter 2010 was reflected by all 11 analysts covering the stock — each one has upped fiscal 2010 estimates within the past month. Rogers has a strong recent history of posting positive earnings surprises, with an average of 25+% over the past 4 quarters.

The longer term Zacks Recommendation of Outperform was bestowed on Rogers Communications Feb. 21st, and its Zacks #1 Rank came on Feb. 24th. Even if we can’t handle a snowboard like the Flying Tomato, at least we can still get some height from diversifying into a winning Canadian stock.

Zacks Investment Research

(RCI) Rogers Communications is Canada’s Top Cable TV and Wireless Company

For the full year 2009, the company recorded net earnings of $7.42 per share as against $12.13 per share in 2008. Earnings also missed the Zacks Consensus Estimate of $7.59 for the year. Net sales were $2.61 billion, down 33% from $3.92 billion in 2008.

Nitrogen Fertilizer Segment

Nitrogen segment sales totaled $352.1 million, down 50% from the fourth quarter of 2008. Volumes remained flat at 1.5 million tons. Overall, average nitrogen selling prices remained depressed.

The selling price for ammonia declined to $308 per ton, a decline of 13% sequentially and about 53% year over year. The company sold 305,000 tons of ammonia in the quarter, down 16% from the year-earlier period.

For UAN, the selling price was down 56% year over year to $156 per ton and remained almost flat sequentially. Sales volume of 494,000 tons was almost equal to the volume in the previous year’s quarter, with exports of 63,000 tons offsetting a decline in domestic sales volume.

During the quarter, the U.S. urea market changed significantly, from being one of the lowest-priced in the world to one of the highest priced. For the quarter, CF Industries realized an average price of $272 per ton of urea, which was 5% higher than the third quarter but 43% lower than the fourth quarter of 2008. Urea sales volume for the quarter was 662,000 tons, up 7% from year-ago levels.

CF Industries benefited from lower sales under its Forward Pricing Program (FPP), which increased its exposure to spot prices for natural gas. Nitrogen sales under the company’s FPP totaled 400,000 tons during the quarter, representing 27% of nitrogen sales volume compared with 75% in the previous year.

Phosphate Fertilizer Segment

Phosphate segment net sales crashed 58% year over year to $154.7 million despite a 36% increase in volumes to 404,000 tons. The company realized an average price of $277 per ton of diammonium phosphate (DAP), about the same as the third quarter, but down 69% from the prior year’s quarter. Prices for DAP rose rapidly in December and continued to rise in January. Tampa contract prices for sulfur increased from $10 per ton for the third quarter to $30 per ton for the fourth quarter.

CF Industries Florida Phosphate Complex operated at 94% capacity during the quarter. Phosphate sales under the company’s FPP totaled about 59,000 tons, representing 11% of segment volume, down from 206,000 tons sold or 51% of segment volume in the fourth quarter of 2008. Phosphate segment volume for the full year 2009 was 2.2 million tons, up 26% from 1.8 million tons in 2008. However, sales of $769.1 million were 42% lower than the $1,330 million in 2008, as average DAP selling prices fell from $760 per ton in 2008 to $321 per ton in 2009.

At December 31, 2009, the company’s cash, cash equivalents and short-term investments totaled approximately $882.1 million, compared to $625.0 million at December 31, 2008. The company stands debt free as of December 31, 2009.

CF Industries expects strong spring market conditions based on higher planted corn acreage and the need to replenish soil nutrients absorbed by last year’s record crop. Shares of CF were up 3.6% to $104.11 in afternoon trading Tuesday.

Zacks Investment Research

(CF) CF Industries’ Profits Plunge

Monsanto reported a net loss of 3 cents per share, compared to a net profit of $1 per share in first quarter of 2009. The Zacks Consensus Estimate for the reported quarter was pegged at a profit of 1 cent per share.

For fiscal 2010, the Zacks Consensus Estimate is $3.26 per share, compared to $3.78 in fiscal 2009. Monsanto expects full-year 2010 EPS in the range of $3.10 to $3.30. The Zacks Consensus Estimate remained unchanged over the past month. However, 2 out of 17 covering analysts lowered their estimates while one analyst raised expectations. The Zacks Consensus Estimate for fiscal 2011 increased 3 cents in the last 30 days as 3 out of 16 analysts have raised their estimates, while 3 have lowered their estimates.

With almost an equal number of analysts raising and lowering their estimates, the Zacks Rank for Monsanto remains at #3, or a short-term rating of Hold.

Monsanto reaffirmed its previously announced cash flow guidance. It expects free cash flow for fiscal year 2010 to be in the range of $900 million to $1 billion, including an after-tax restructuring charge of $250 million. Monsanto expects net cash provided by operating activities at $2 billion to $2.2 billion, and net cash required by investing activities at $1.1 billion to $1.2 billion for fiscal year 2010.

We maintain our long-term recommendation of Neutral for Monsanto as we believe that its healthy balance sheet, along with a robust pipeline of new products and continuous growth in the seeds and genomics segment will drive long-term growth.

Zacks Investment Research

(MON) Monsanto Results Remain Stable

Deerfield, Illinois-based CF Industries has been pursuing a hostile acquisition of Terra since January of last year. However, Terra’s shareholders has been repeatedly rebuffing CF’s offer. In its last bid, CF had increased its offer price for Terra by 12% to $4.6 billion. CF Industries had bought about 7% of Terra, which it claims to have sold with a net gain that more than offset the expenses it incurred in connection with its proposed acquisition. Terra shares closed Thursday up 5 cents at $32.66, but lost $3.61 in aftermarket trading.

CF Industries now is likely to focus on fighting off its own hostile takeover by another rival Agrium Inc. Calgary, Alberta-based Agrium Inc. (AGU), has pursued CF for nearly a year in an effort to block its rival’s grab for Terra, allowing CF to become the larger competitor. Agrium Inc. is a major retail supplier of agricultural products and services in both North and South America and a leading global producer and marketer of agricultural nutrients and industrial products.

In November 2009, CF Industries rejected Agrium’s $5 billion acquisition offer on grounds of valuation. On Thursday, Agrium extended the offer to February 22. Agrium remains firm on acquiring CF. Agrium also notified that it plans to nominate two independent directors for election to CF’s Board of Directors at its 2010 annual meeting of stockholders. CF Industries has yet to schedule the annual meeting. Under Delaware law, the company is supposed to hold it within 13 months of the previous meeting, which was held in April 2009.

As the economy declined, demand for fertilizers from farmers decreased, driving down prices that fertilizer companies charge as well as the price of their shares. CF Industries’ decision to abandon its bid partly ends the three-way battle for control of the North American fertilizer business.

Zacks Investment Research

(CF) CF Industries Holdings Ends Terra Pursuit

In-plant breeding, genotyping — or gene analysis — is used to identify seeds or plants with the most desirable characteristics, such as better yield or disease resistance. Currently, Monsanto’s gene analyses are limited by the number of samples that can be processed at one time and the turnaround time per sample.

Stokes Bio’s system utilizes microfluidic technology that can provide the same evaluations using much smaller sample sizes –- as little as 1/1000th of what is currently required -– which continually flow through the system in nanoliter-size droplets.

The instrument can evaluate up to 100,000 data points per hour, making it more efficient than any method of gene analysis currently used. It is capable of generating more data in less time, using less sample and reagent, and at a cost lower than existing technologies. Stokes Bio will deliver a number of these next-generation genotyping instruments to Monsanto in 2011.

The new technology has applications in areas ranging from plant genetics through the entire spectrum of human healthcare, which will help boost productivity.

Monsanto is a leading global provider of agricultural products. The company’s pipeline of agricultural biotechnology products stands unmatched in the industry.

However, the intense competitive environment and Monsanto’s huge dependence on a few large customers pose a risk. Nevertheless, a healthy balance sheet, coupled with a robust pipeline of new products along with the continuous growth in the seeds and genomics segment, appears encouraging. Thus we maintain our Neutral recommendation on Monsanto.

Zacks Investment Research

(MON) Monsanto Company Signs Licensing Deal

Net sales decreased $952 million, or 36% year over year to $1,697 million in the first quarter of fiscal 2010 primarily as a result of decreased sales of glyphosate-based herbicides in Brazil and Europe. Monsanto reported a net loss of 3 cents per share in the first quarter of fiscal 2010, compared to a net profit of $1.00 per share in first quarter 2009. The Zacks Consensus Estimate for the reported quarter was a net profit of 1 cent per share.

For the first quarter of fiscal 2010, net cash required by operating activities was $1.4 billion, and the inflow was $114 million in the first quarter last year. Free cash flow was a use of $1.6 billion for the first quarter of fiscal 2010, and the inflow was $124 million in the first quarter of fiscal 2009.

Monsanto reaffirmed its previously announced cash flow guidance. It expects free cash flow for fiscal year 2010 in the range of $900 million to $1 billion, including an after-tax restructuring charge of approximately $250 million.

Monsanto expects net cash from operating activities between $2 billion and $2.2 billion, and net cash required by investing activities between $1.1 billion and $1.2 billion for fiscal year 2010. Monsanto confirmed full-year 2010 ongoing EPS guidance in the range of $3.10 to $3.30. We expect Monsanto to post decent results for the coming quarters based on its product launches.

We maintain a Neutral rating on the shares of Monsanto.

Zacks Investment Research

(MON) Monsanto Reports a Net Loss

The holidays have been kind to Steve Maddens (SHOO) share price, recently rebounding from a key trend line at $35 to move back within striking distance of the 52-week high just above $45. Shares of SHOO have been riding this very smooth trend higher since bottoming out in early March with the overall market. If shares do pullback again look for more support from here. Take a look.

Zacks Investment Research

(CGA) International Agriculture Co. Pulled Back From 52-week High to Rebound From Key Trend Line

CF Industries has been seeking to acquire Terra since January, offering $2.1 billion while fending off a hostile bid from Agrium Inc. (AGU) itself. The outcome of the three-way battle will determine whether Agrium or CF will become the world’s second-largest publicly traded maker of nitrogen-based fertilizers. Terra has rebuffed CF’s previous offers on the ground of undervaluation.

CF Industries has a leading market share in many key fertilizers. It is prepared for a reasonably good application season (weather permitting) and solid spring demand due to attractive corn farming economics and restocking needed by the downstream fertilizer channels.

Prices for granular urea and other nitrogen-based fertilizers have advanced since the end of October amid rising corn prices. The industry’s drive for consolidation intensified at the start of the year when fertilizer company share prices had been pulled down. As the economy declined, struggling farmers scaled back demand for fertilizer, driving down prices that fertilizer companies charge as well as the price of their shares.

Our Neutral recommendation on CF Industries remains unchanged at this stage.

Zacks Investment Research

(CF) CF Industries Holdings Renews Terra Industries Bid

Along with the 24 retail outlets and associated working capital at these locations, Agrium acquired over 50,000 tons of fertilizer storage. The company expects annual crop input revenues of approximately $150 million from these retail outlets. Through this acquisition, Agrium reaffirmed its commitment to double the size of its retail business.

Further, Agrium stated that it has not lost its focus on acquiring CF Industries Holdings, Inc. (CF). Earlier this month, the company had increased its offer to acquire all of the outstanding shares of CF Industries Holdings, Inc. Under the terms of the offer, stockholders would receive $45.00 in cash ? an increase of $5.00 or 12.5% in the cash consideration ? and one common share of Agrium for each CF share.

Agrium expects to become a global leader in nutrient production and distribution, with a combined crop nutrient production capacity of about 17 million tons, through the CF acquisition. If it succeeds in acquiring CF, Agrium would become the world’s fourth-largest fertilizer producer.

However, CF rebuffed Agrium’s offer, alleging substantial undervaluation of the company. Meanwhile, since the beginning of the year, it has also been pursuing rival Terra Industries (TRA), who has consistently rejected CF’s proposal on the same grounds.

We maintain a Neutral rating on Agrium.

Zacks Investment Research

(AGU) Agrium Grows Through Acquisitions

Company Description

China Green Agriculture, Inc., through its subsidiaries, develops and manufactures specialty fertilizers in China. The company also produces agricultural products like fruits, vegetables and flowers. China Green was founded in 200 and has a market cap of $297 million.

Chinese stocks are hot, and CGA is no exception, with the company’s strong third-quarter results, reported on Nov. 11 helping to push shares back within striking distance of the 52-week high.

Third-Quarter Results

Sales were up 27% from last year to $11.3 million. EPS also came in strong at 24 cents per share, 4 cents ahead of the Zacks Consensus Estimate. The company has beat in each of the last four quarters by an average of 4 cents, or 26%.

The company’s largest segment, Jinong, which sells fertilizer compounds and accounts for 90% of revenue, noted its top three sellers accounted for 16% of total sales, displaying solid revenue diversity. The group’s sales were up 33.5% from last year, driven by increased production capacity and sales of its higher-end products.

Margins Expansion and a Strong Balance Sheet

Gross margin also expanded nicely, increasing to 62% from 56% last year. The company’s cash position jumped $17.4 million to $35 million. Short-term loans totaled $2.2 million, against equity of $85.5 million. The company has no long-term debt.

Estimates Jump

After word of the good quarter estimates moved higher. The current-year estimate added 6 cents and now stands at 91 cents. The next-year estimate is pegged at $1.36, a bullish 49% growth projection.

Valuation

Shares of CGA are trading have some value too, trading with a forward P/E of 14X, a discount to the overall market.

The Chart

Shares of CGA are up big since taking flight in early April, hitting a new 52-week high at $15 in August. Since then shares have traded mostly sideways but continue to pressure to the top end of the recent range, take a look below.

Zacks Investment Research

(CGA) China Green Agriculture – Margins Expand – Strong Balance Sheet

Potash Corp.’s earnings declined 79% in the third quarter of 2009. The company expects fertilizer demand to remain weak for the rest of 2009, and plans to cut potash production. Potash Corp. has also lowered its expected earnings and slashed 2010 global potash demand expectations.

About 40% of global potash production capacity stands idle since the second half of 2008. The company also expects some of its capacity to remain curtailed in 2010.

Zacks Investment Research

(POT) Potash Corporation – Bear of the Day

Monsanto now anticipates its new Genuity SmartStax corn seed will launch on more than 4 million acres in 2010, compared to its previous expectation of 3 million to 4 million acres. As a part of the accelerated adoption of Genuity SmartStax, the company unveiled a new portfolio of product upgrades for key U.S. corn segments.

For the Genuity Roundup Ready 2 Yield platform in U.S. soybeans, Monsanto increased its launch-year expectation for 2010 to 8 – 10 million acres, compared to its previous projection of 7 – 8 million.

These launches, along with increased penetration in Latin America, are expected create opportunities for the company to meet its 2012 financial and commercial targets.

Monsanto is committed to doubling its gross profit by 2012 from 2007 levels. The company expects 2012 gross profit of $8.6 – $8.8 billion, including $7.3 – $7.5 billion from the Seeds and Genomics platform.

Monsanto reaffirmed fiscal year 2010 EPS guidance in the range of $3.10 – $3.30. Also, the company is confident of achieving its free cash flow target of $900 million to $1 billion for fiscal year 2010. The Zacks Consensus Earnings Estimate for fiscal 2010 is $3.27.

Zacks Investment Research

(MON) Monsanto Company Confirms Guidance

Retail segment: Retail segment revenues plunged 25% to $1.2 billion in the quarter on a 41% decline in crop nutrient sales to $345 million due to a significant decline in crop nutrient prices. Crop nutrient volumes in the quarter remained flat. Gross profit from the crop nutrients business almost halved to $31 million. Crop protection sales were $768 million in the quarter, down 12% from the same period last year. The decline was driven by lower volumes for fungicides and lower pricing for glyphosate products.

Gross profit in the quarter was $169 million, down 12% from the previous year. Profit from the nutrient business was down significantly due to lower sales volumes from Legacy Agrium Retail and significantly lower margins resulting from the carry-over of high priced crop nutrient inventories, which were sold at lower prices. Sales for seed and services decreased 14% to $114 million.

Wholesale segment: Wholesale’s net sales were down 59% to $658 million in the quarter, driven by lower sales prices and volumes for nitrogen and phosphate products combined with significantly lower potash sales volumes. Nitrogen sales were down 48% to $260 million while potash sales declined 56% to $109 million. Phosphate sales were down 64% to $114 million.

Following lower sales, nitrogen profits shrank 61% to $80 million while potash profits declined 81% to $47 million. Phosphate profits of $1 million were negligible compared with $195 million in the year-ago quarter.

Both international and domestic demand were significantly lower than usual due to a combination of delayed contract settlements in China and India, credit issues in many other international markets and the current cautious approach to replenishing stocks of retailers and distributors in North America and globally.

Advanced Technologies segment: Sales in the Advanced Technologies segment were down 33% to $60 million year over year, driven by lower volumes and margins in turf and ornamental business due to lower household expenditures as a result of the slower economic growth. Cash provided by operating activities was $229 million in the quarter compared to $300 million in the prior year.

Compared to the end of the third quarter of 2008, net debt to net debt plus equity dropped 10% to 26% at the end of the quarter. Agrium sees a significant recovery in demand across all crop inputs starting early 2010, particularly for the retail and potash businesses. Corn prices are recovering and the growth for food products is set to remain strong.

Through all three operational business units – Retail, Wholesale, and Advanced Technologies – Agrium is well positioned to benefit from a recovery in the agriculture and crop input market. Agrium expects earnings per share of 14 cents to 44 cents in the fourth quarter of 2009. Meanwhile, Agrium repeated its commitment to acquire Deerfield, Illinois-based CF Industries (CF) and its willingness to increase its offer of $40 in cash plus one U.S. dollar-denominated Agrium share.

CF has steadfastly rejected Agrium’s takeover offer. Despite two upward revisions in the offer price, CF had turned down Agrium primarily on the grounds of substantial undervaluation. CF Industries has meanwhile made a hostile takeover bid for rival Terra Industries. Terra, which produces and markets nitrogen products, has repeatedly rebuffed CF’s proposal.

However, CF remains committed to acquire Terra. Agrium also remains committed and has extended the deadline several times. The company has stated that its cash reserves are sufficient and has committed financing to complete the deal. Should the acquisition go through, Agrium would become the world’s fourth-largest fertilizer producer.

Zacks Investment Research
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(AGU) Agrium’s Year-Over-Year earnings Declined a Significant 87% on Lower Volumes and Prices

Nitrogen Fertilizer Segment

Nitrogen segment sales totaled $276.1 million, down 54% from $599.1 million in the 2008 third quarter on a 3% decline in volumes to 1.2 million tons. The quarter’s volume included about 132,000 tons of UAN and urea exports.

Overall, average nitrogen selling prices remained depressing. Selling price for ammonia declined to $355 per ton from $571 in the second quarter of 2008. For UAN, the selling price was down to $155 per ton from $339 a year ago. For urea, the selling price declined to $260 per ton from $596 in the year-earlier quarter. However, the segment benefited from significantly lower natural gas prices in North America.

CF Industries benefited from lower sales under its Forward Pricing Program (FPP), which increased its exposure to spot prices for natural gas. Nitrogen sales under the company’s FPP totaled 400,000 tons during the quarter, representing 36% of nitrogen sales volume compared with 75% in the previous year.

Phosphate Fertilizer Segment

Phosphate segment net sales crashed 63% year over year to $154.0 million. Volume was 497,000 tons, up 9% from 457,000 tons in the year-earlier quarter, reflecting sales of 58,000 tons of previously purchased potash during the quarter. With these sales, the company claims to have eliminated its inventory of potash. Average price of $281 per ton for DAP was down 8% sequentially and down 70% from the prior year’s quarter.

CF Industries’ Florida Phosphate Complex operated at 85% of capacity during the quarter, reflecting a significantly reduced operating rate during the month of July. Phosphate sales under the company’s FPP totaled about 61,000 tons, representing 12% of segment volume, down from 237,000 tons sold or 52% of segment volume in the third quarter 2008.

At Sept. 30, 2009, CF Industries’ cash, cash equivalents and short-term investments totaled about $702.6 million, compared to $625.0 million at Dec. 31, 2008. The company stands debt free as of Sept. 30.

Outlook

CF Industries is prepared for a reasonably good fall application season (weather permitting) and solid spring demand due to attractive corn farming economics and restocking needed in the downstream fertilizer channels.

The industry has been under strong consolidation pressure with prices declining sharply. CF Industries is involved in a three-way merger battle with Agrium Inc. (AGU) and Terra Industries Inc. (TRA). Since the beginning of 2009, Terra has repeatedly rebuffed CF’s takeover offer, while itself being the takeover target of Agrium. Last month, CF acquired a 7% stake in Terra. We maintain our Neutral recommendation on the stock.

Zacks Investment Research
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(CF) CF Industries Holdings’ Profits Plunge in 3rd Quarter

Air Products will build a steam methane reformer (SMR) producing over 100 million standard cubic feet per day (MMSCFD) of hydrogen. The SMR will be connected to Air Products’ East Gulf Coast pipeline network, which supplies refineries with hydrogen needed to make cleaner burning transportation fuels, in addition to meeting the hydrogen needs of the local petrochemical industry. In addition, the facility will produce additional hydrogen via a clean-up of a hydrogen-rich off-gas feed coming from Monsanto. Monsanto will use steam from Air Products’ SMR process to benefit its Roundup production plant.

This agreement is a win-win for Monsanto as it will help reduce natural gas usage to make steam, which will in turn help serve its farmer customers in a more environmentally sustainable manner.

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. Monsanto remains focused on enabling both small-holding and large-scale farmers to maximize production from their land while conserving more of our world’s natural resources such as water and energy. The company’s direct competitor is Syngenta AG (SYT).

Zacks Investment Research
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(MON) Monsanto Wins New Contract

The reported quarter’s sales totaled $1.1 billion, down 64% from $3.1 billion in the third quarter of 2008. The drop in sales and thereby earnings was driven by a decline in potash, phosphate and nitrogen sales volumes coupled with lower phosphate and nitrogen prices. The company blamed the global economic downturn for the drop in sales volumes and prices. However, it expects to see a strong rebound in potash sales volumes in 2010.

Sales in the Potash segment declined 63% year over year to $423.4 million on a 44% decrease in sales volumes to 1 million tons and a 34% drop in average selling prices to $389.2 per ton. For 2009, Potash Corp. expects sales volumes to be in the range of 3.0 to 3.2 million tons, down from the previous estimate of 4.5 to 5.0 million tons.

Phosphate sales volumes decreased 9% year over year to 882,000 tons in the quarter due to lower liquid fertilizer, feed and industrial volumes. Average realized phosphate prices in the quarter halved to $356.24 per ton compared to the year ago quarter. Phosphate net sales amounted to $319.2 million in the quarter, a decline of 69% from the prior-year quarter.

Nitrogen sales were down 64% to $3 billion in the quarter on a 63% decline in average selling prices to $203.73 per ton. Volumes remained almost flat at 1.4 million tons. Urea sales volumes increased 31% to 367,000 tons in the quarter.

The global economic crisis and weak demand are matters of concern for Potash Corporation. Potash Corp is expecting fourth quarter net income per share to be in the range of 65 cents to 85 cents. For the full year, the company anticipates earnings to be at the lower end of $3.25 to $3.75 per share, down from the previous estimate of $4.00 to $5.00. Full-year potash gross margin is expected to be in the range of $0.7 million to $0.9 million against the prior guidance of $1.2 million to $1.5 million.

Foreseeing lower demand, Potash Corp. — which directly or indirectly accounts for more than 22% of the world’s potash production capacity — regulated the price of potash by adjusting output aims. It curtailed potash production in early 2009 by more than 2 million tons, which is slightly below the 2008 level.

Although the company has forecast a rebound in potash demand in 2010, it anticipates some of its production capacity to remain idled through the year. Potash Corp expects global potash demand of about 50 million tons in 2010.

We downgrade Potash Corp. from Neutral to Underperform.

Zacks Investment Research
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(POT) Potash Corporation of Saskatchewan Downgraded Post-Report

Over the past two weeks, CF Industries had acquired a 7% stake in Terra valued at nearly $247 million. CF’s proposed exchange ratio of 0.465 CF shares per Terra share (which CF plans to reduce in case Terra declares its special cash dividend of $7.50 per share) does not reflect Terra’s much larger contribution of nitrogen results to the combined entity. While Terra would contribute about 59% of the nitrogen results of the combined entity, its shareholders would receive only 48.5% of the equity pre-dividend, reduced to about 43.2% post-dividend.

Terra also stated that it has lowered its dependence on agricultural ammonia sales by upgrading its product mix to urea ammonium nitrate solutions and industrial ammonium nitrate. A combination with CF would shift that focus back to agricultural ammonia. Moreover, Terra has located its core manufacturing assets away from the U.S. Gulf Coast, where import competition is the most severe. A combination with CF, which has 73% of its total ammonia production on the U.S. Gulf Coast, would undercut Terra’s geographical advantages.

Deerfield, Illinois-based CF Industries is itself a takeover target of Agrium Inc. (AGU), a fertilizer company based in Canada. Agrium’s pending offer for CF is another major uncertainty for Terra. Terra believes that CF’s stock price is inflated due to Agrium’s pending offer. Hence, the actual value of CF’s offer could be significantly lower than current trading prices would indicate.

The CF?Terra?Agrium tussle is part of a three-way battle for power in the fertilizer industry. Since the start of the year, Terra has repeatedly refused offers from CF, which is the takeover target of Agrium. The industry has been under strong consolidation pressure with fertilizer prices declining sharply.

We maintain our Neutral recommendation on CF.

Zacks Investment Research
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(CF) CF Holding Industries-Terra Industries Battle Rages on

Excluding one-time items (on an ongoing basis), the company reported earnings of 2 cents per share, compared to a loss of 3 cents per share in the year-ago quarter. This was above the Zacks Consensus Estimate of 1 cent per share.

However, the company posted a wider loss in the quarter, which increased to 43 cents per share on an as-reported basis, from 31 cents in the year-ago quarter, due to restructuring charges and the divestiture of the company’s sunflower operations. Restructuring lowered earnings by 53 cents.

During the quarter, the company also increased the restructuring reserve to the $550 – $600 million range to support its cost-cutting effort. SG&A as a percentage of revenue was 25% in the quarter versus 35% in the year-ago quarter.

Total revenue fell 8.4% to $1.88 billion from the year-ago quarter, primarily due to a fall in sales of the company’s Roundup and other glyphosate-based herbicides business. This business has been negatively impacted by severe pricing pressure and supply-demand imbalance, offset by higher sales of corn seeds and traits, as well as higher sales of vegetable seeds.

The Seeds and Genomics segment posted sales of $908 million, down 3.5% year over year, and accounted for 48.3% of the total revenue in the quarter, while sales for the Agricultural Productivity segment were $971 million, down 12.5% from the fourth quarter of fiscal 2008. The segment is responsible for the remaining 51.7% of total revenue.

For the full year 2009, Monsanto revenue growth was driven by higher worldwide corn seed and traits revenue, increased soybean seed and traits revenue in the United States, and higher cotton seed and traits revenue driven by higher trait penetration in India and increased acres in Australia. Increased revenue from the company’s vegetable seed portfolio also contributed to good results in the year.

Guidance Reaffirmed

For fiscal 2010, Monsanto affirmed its prior guidance of $3.10 to $3.30 per share on an ongoing basis, based on expectations of continued progress in the seeds and traits, cotton and vegetable products.

The company also re-iterated guidance for free cash flow for fiscal year 2010, which is expected to be in the range of $900 million to $1 billion, including the after-tax cash effect from the restructuring of approximately $250 million. The company expects net cash provided by operating activities to be $2 billion to $2.2 billion for fiscal year 2010.

As a result of growing competition and pricing pressure in its herbicide business, Monsanto has been shifting its focus to its highly profitable seeds and traits, which are targeted to account for 85% of Monsanto’s business in 2012 and expected to cross the $5 billion gross profit mark for the first time in 2010.

Zacks Investment Research
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(MON) Monsanto Beats Estimates and Reaffirms

You don’t have to look far to find one of today’s big economic and market buzz phrases: Green investing.

From green clothing websites, to CNN headlines heralding biofuel, companies are trying their best to capitalize on growing consumer sensitivity to the environment.

However, like the dotcom era before it, some of the green craze is no more than a speculative bubble. But many of it is the real deal. And despite past debacles, biofuels fall into the latter category.

A Deal With Dow

Take start-up company Cavitation Technologies Inc. (CVAT), which develops equipment that turns vegetable products into viable fuel. Only established in 2006, it just entered into a long-term agreement with Dow Chemical Co. (NYSE: DOW) to develop projects in Argentina and Latin America.

The deal works well for both companies, since Dow hopes to improve its image through a measurable round of good publicity. It’s received a bad rap in the past, due to its work with cancer-inducing chemicals and the lawsuits that followed.

And although world demand for chemical products continues at a steady pace, ensuring Dow’s marketability for some time to come, branching out into biofuels should bring additional revenues and a better image in communities.

Its efforts in that field haven’t gone unnoticed, with Dow Jones ranking Dow Chemical on its Sustainability Index for the ninth time.

As for CTI, it wants to capitalize on Dow’s heavyweight image, using the partnership to further its own sustainability goals.

Nevertheless, biofuel still struggles to find a market these days, but its appeal has already taken off in the airline industry…

A Little Help From the Feds

At least two companies – BioJet Corporation and E85 LLC – have finalized agreements to sell four million barrels of aviation bio jet fuel – a first step in promoting common usage. By the time they’re done, they hope to provide 30 million barrels annually to airlines.

And in an effort to combat climate change, the European Union has inadvertently lent a helping hand to CTI, Dow and their competitors by mandating fuel requirements that will affect 4,000 aviators, including military bases.

In the U.S., Congress will likely pass similar legislation, although with the very vocal free market voices, it’s bound to be less severe.

Between the two, CTI and Dow both stand to profit, as airlines scramble to meet the regulations by buying millions of barrels of more complimentary kinds of fuel.

Still, keep in mind that the biofuel industry will have certain obstacles over the next several years:

• It has yet to be tested on a large scale.
• Widespread distribution remains a problem.
• It faces industry reluctance, as oil companies try to stick with old methods for as long as possible (although Chevron Corporation (NYSE: CVX) and BP (NYSE: BP) both have biofuel divisions).
• Consumers will need time to transition from the old to the new.
• Too many cars and planes simply can’t run on biofuel without large modification.

The Switch From Oil to Alternatives

Still, environmental responsibility continues to provoke debate, especially among younger generations. And even though “Big Oil” has a big grip on the energy sector, biofuel and other alternative energy resources will eventually make a bigger impact.

And I expect other companies – both old and new – to begin looking for innovative ways to fuel their business and meet consumer demand for greater stewardship.

Eventually they have to address the finite amount of fossil fuels, shortage of landfill space and the abundance of waste. And biofuel can positively impact all of those problems… not overnight, but over the long-term.

And when they do, Dow Chemicals and CTI will be there to help them out.

Louise Harris

View original at: Investment U

(CVAT) Two Companies Profiting From the “Fuel of the Future”

During the past 90 days, the Zacks Consensus Estimates have been revised downwards on several fertilizer companies, including Agrium (AGU), Intrepid Potash (IPI), Mosaic (MOS) and Potash of Saskatchewan (POT).

The most recent cuts were related to a warning from POT. The company predicted that its full-year profits would be in the range of $3.25 to $3.75 per share, instead of the prior guidance of $4 to $5 per share. The company blamed “continued slow demand and limited restocking by fertilizer distributors” as the reasons for the revised forecast.

All Is Not Well on the Farm

The big reason why profit projections for fertilizer companies have been falling is not weaker demand for fertilizer, but rather why demand is down. After enjoying very strong profits in 2007 and 2008, many farmers are now seeing their incomes drop. Even after adjusting for a recent rebound, corn futures are down substantially from the start of the year. Wheat prices are also down. Soy prices have plunged over the past few months.

Supply is a big reason why. Though the spring planting season was delayed, favorable weather patterns resulted in bumper crops throughout the summer. At the same time, a decline in oil prices hurt demand for ethanol, which, in turn, impacted farmers.

Compounding matters is the economy. The worldwide contraction likely reduced food consumption. (Did you notice how there were not any headlines about food shortages this year?) Plus, consumers have looked for cheaper ways to feed their families. These factors have kept cattle prices weak, which contributed to weaker demand for grains.

Then there is the banking crisis. Bank closures affect rural areas worse than urban areas because of a lack of competition. In some rural communities, the only nearby bank was seized by the FDIC. Not to mention the increased difficulty of securing loans.

The net result is lower farm profitability. In late August, the Department of Agriculture forecast that farm profits would fall 38% this year. There has been relatively little since then that would cause a big, positive revision to that forecast.

Mergers Are the One Positive

The one positive for the group are the proposed deals.

CF Industries (CF) announced on Monday that it bought 7% of Terra Industries’ outstanding stock over the past 2 weeks. CF wants TRA shareholders to accept a merger agreement that would represent an approximate 15% premium over TRA’s current share price.

However, Agrium wants to purchase CF. AGU recently extended the deadline for its acquisition offer of CF to Oct 22. (The offer represents approximately a 4% premium over CF’s current price.) It is probable that if AGU were to buy CF, CF’s acquisition of TRA would be called off.

Compounding matters is the fact that TRA recently announced a special $7.50 per share dividend, payable in the fourth quarter. CF’s offer for TRA would be adjusted to reflect this dividend.

The merger activity makes shorting these stocks risky over the very near-term, even with the falling estimates. On the other hand, much of the upside from the proposed deals appears to be priced in. Overall, the downside risks outweigh probable short-term upside, particularly if neither acquisition offer is accepted.

Zacks Rank

IPI, MOS and POT are Zacks #5 Rank (“strong sell”) stocks. AGU and CF are Zacks #3 Rank (“hold”) stocks. They are all classified in Fertilizers, which has a Zacks Industry Rank of 206, placing the group near the bottom of the Industry Rank List.

Fertilizers stock also account for a significant portion of Market Vectors Agribusiness (MOO), something to consider when evaluating this ETF.

Charles Rotblut, CFA, is the senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com.

Zacks Investment Research
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(AGU) Fertilizer’s Farming Problem – Zacks Industry Rank Analysis

Fertilizer maker Terra responded that its board has decided to hold an annual meeting on Nov. 19. The company had postponed the meeting when larger rival CF Industries launched an unsolicited bid in April this year. In its statement, CF noted that Terra’s last annual general meeting was held nearly 16 months ago and according to law, annual general meetings must be held on an annual basis.

Terra repeatedly rebuffed CF’s takeover bid stating that the offer substantially undervalues the company. CF’s all-stock offer for Terra Industries has expired and the company does not plan to extend the offer because of opposition from Terra’s board. However, CF stated that it continues to pursue Terra.

CF is offering a 35% premium in an all-stock takeover bid. The company raised its offer this month to 0.465 shares of CF for each share of Terra, which makes and sells nitrogen products. In January, CF had made an offer valued at around $2.1 billion, raising it in March to about $2.2 billion.

CF is a holding company for CF Industries, which sells nitrogen and phosphate fertilizers. CF is itself fending off a hostile bid from larger Canadian rival Agrium Inc. (AGU). CF maintains that Agrium’s offer undervalues the company. CF also believes that Agrium intends to distract its hostile takeover bid for Terra.

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(CF) CF Industries Sues Terra Industries to Force a Shareholder Meeting on Combining

Since January this year, the Illinois-based fertilizer company has been wooing its Iowa-based rival Terra in an all-stock deal for a total of $2.1 billion. Under the original proposal, each common share of Terra would have been entitled to receive 0.4235 shares of CF. However, Terra rejected the offer for the second consecutive time on Mar. 5, saying it undervalued the company.

In response, CF increased its offer price on March 9, to $2.77 billion based on $27.50 for each Terra share and again on March 23, to $3.07 billion based on $30.50 each by agreeing both times to an exchange ratio of not less than 0.4129 and not more than 0.4539 of each of CF’s share.

The third offer of $30.50 per Terra share was a premium of over 85% to Terra’s stock price before CF made the original offer on Jan. 15. Terra, however, again rejected CF’s offer the next day, citing the same reason of undervaluation.

In the beginning of August, CF sweetened the deal by raising the fixed exchange ratio to 0.465 shares of CF Industries for each Terra common share. This would bring about $1 billion in cash to shareholders of the combined company after the proposed deal closes. It would also distribute 5 million contingent future shares to CF stockholders. The contingent shares would be converted into CF stock if the stock trades at more than $115 per share over a certain period after the completion of the potential transaction.

As of Aug. 20, about 11.5 million shares of Terra common stock had been tendered into the exchange offer. CF anticipates the proposed bid to produce annual cost savings of $105 million–$135 million.

We recommend the shares of CF as Neutral.

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(CF) CF Extends Terra Exchange Deadline

Since January 2009, CF has been wooing its Iowa-based rival in an all-stock deal worth $2.1 billion. Under the original proposal, each common share of Terra would have been entitled to receive 0.4235 shares of CF. However, Terra rejected the offer for the second consecutive time on March 5, citing undervaluation of the company.

In response, CF increased its offer price on March 9, to $2.77 billion, or $27.50 for each Terra share, and again on March 23, to $3.07 billion, or $30.50 each, by agreeing both times to an exchange ratio of not less than 0.4129 and not more than 0.4539 of CF’s share.

The third offer of $30.50 per Terra share was a premium of over 85% to Terra’s stock price before CF made the original offer on Jan. 15. Terra again rejected CF’s offer the next day, citing the same reason of undervaluation.

The new exchange ratio is stated to bring about $1 billion in cash to shareholders of the combined company after the proposed deal closes. It would also distribute 5 million contingent future shares to CF stockholders. The contingent shares would be converted into CF stock if the shares trades at more than $115 each over a certain period after completion of the potential transaction.

CF anticipates the proposed deal to produce annual cost savings of $105 million–$135 million. Terra commented that its Board will look at the new bid by the end of this month.

We recommend the shares of CF as Neutral.

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(CF) CF Industries Sweetens Terra Deal

The company has surprised on estimates 4 quarters in a row by an average of 53.27%. First-quarter estimates are rising as spring planting season begins. TRA has a PEG ratio of 0.97.

Company Description

Terra Industries produces nitrogen products for various markets including agriculture, industrial and environmental customers.

The company operates 6 North American nitrogen products manufacturing plants and a a 50% interest in joint ventures in the UK and The Republic of Trinidad and Tobago.

For the last few months, Terra has been subject to an offer of acquisition by CF Industries Holdings (CF).

The first offer was rejected by Terra’s Board of Directors. On Mar 23, CF said it was prepared to raise its offer by 11% to $30.50 for each Terra share.

On Mar 24, Terra’s Board also rejected the higher offer stating, “this most recent version of your proposal continues to run counter to Terra’s strategic objectives, substantially undervalues Terra both absolutely and relative to CF, and would deliver less value to our shareholders than would owning Terra on a stand-alone basis.”

CF has not indicated that it’s going away anytime soon even though it is also subject to an acquisition offer itself from Agrium (AGU).

Stay tuned for further developments. It’s getting interesting.

Record 2008 Results

Business continues on, as usual, for Terra despite the CF acquisition offer. On Feb 10, the company reported record 2008 results as revenue jumped 26% to $2.9 billion from $2.3 billion in 2007.

The increase was fueled primarily by higher selling prices as prices of Ammonia, UAN and AN rose 64%, 48% and 38%, respectively, compared to the year ago period. Sales volume declined for ammonia and UAN, by 5% and 4%, while AN sales increased by 2% compared to 2007.

Net income was a company record as it more than doubled in 2008 to $6.20 per share up from $1.90 per share in 2007.

Fourth quarter earnings beat estimates by 53.27% as the company reported an adjusted $1.64 per share. Analysts had expected only $1.07.

Revenue for the fourth quarter jumped 20% to $683.5 million from $569 million in the fourth quarter of 2007 mainly due to higher nitrogen product selling prices.

Sales volumes declined sharply, however, due to the global slowdown. Terra recorded $49.8 million in charges related to derivative and inventory valuation. It also idled its Donaldsonville, LA and Woodward, OK manufacturing plants due to slow December demand.

Cash Rich

As of Dec 31, 2008, Terra Industries had cash balances, including approximately $37 million in derivative margin deposits, of $1.003 billion.

Outlook for 2009

The company expects spring nitrogen demand to be strong as those growers who deferred applications in the fall must buy in the spring.

Terra also forecasts nitrogen selling prices to improve as demand increases. The company also sees industrial ammonia demand staying weak.

Consensus Estimates Rise for 2009

Analysts have been all over the place on Terra’s earnings estimates. Estimates have fallen sharply from 90 days ago before the global recession deepened. But in the last 30 days, estimates have turned higher.

First quarter consensus estimates are up 2 cents to 37 cents in the last 30 days. Full-year 2009 consensus estimates rose 5 cents to $3.19 in the last month.

Value Fundamentals

Terra Industries is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 7.7. Its price-to-book is 2.76. The company also has an outstanding 5-year return on equity (ROE) of 23.12%.

Additionally, Terra rewards shareholders with a dividend that is currently yielding 1.50%.

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(TRA) Terra Industries Inc. – Value – Zacks Rank Buy

Company Description

Scotts Miracle-Gro is the world’s largest marketer of branded consumer products for lawn and garden care, and professional horticulture products.

In the U.S., the company operates Scotts LawnService(R), the second largest residential lawn care service business. In Europe, SMG’s brands include Weedol(R), Pathclear(R), Evergreen(R), Levington(R), Miracle-Gro(R), KB(R), Fertiligene(R) and Substral(R).

Record Results

SMG is seeing share price momentum after delivering record fiscal first-quarter sales. The company posted record first-quarter sales of $318 million, which came in 3% above the year-prior level. The company noted that the improvement was led by a 9% jump n its Global Consumer business and 5% growth in Global Professional.

“Sales growth, combined with improved gross margins, gave us an encouraging start to the fiscal year,” said Jim Hagedorn, chairman and chief executive officer. “While it’s early in the season, we are pleased that consumers in warm weather markets remain engaged in the category, which gives us continued confidence as we look toward the break of the season nationwide.”

The company also reported a seasonal net loss, which was an adjusted 81 cents, compared to last year’s loss of 89 cents. The result came in 13% ahead of analysts’ estimates.

Higher Forecasts

Scotts Miracle-Gro upped its full-year outlook on an adjusted basis to a range of $2.10 to $2.30 per share, adding that it expects to generate free cash flow of $150 million to $170 million for the year, growth of up to 20% from 2008.

“Strong retailer support, combined with our new product offerings and aggressive marketing plans, give us positive momentum as we enter the season,” Hagedorn said. “Our success in 2009, however, will be based on keeping consumers engaged in lawn and garden – a category that has historically fared well in economic downturns.”

Analysts have also been bullish on SMG’s earnings projections, raising fiscal 2009 estimates by 11% over the past 2 months to $2.27 per share.

The Chart

As indicated on the one-month chart below, SMG bounced higher after turning in a robust first quarter. Shares are trading close to the current 52-week high, on path to establish a new one.

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(SMG) The Scotts Miracle-Gro Co. – Momentum – Zacks Rank Buy

Time to Load Up on Fertilizer Stocks?

Springtime is usually the season when the farming community begins to spread fertilizer on their fields. Organic farmers typically use manure from farm animals, or some other form of organic compost. Large, commercial operations typically use ground potash, a rock mined in Canada and elsewhere.

I’m not going to debate organic versus conventional farming here, but suffice it to say that all plants – regardless of how they are grown – need a good source of nitrogen and potassium.

Potash – otherwise known as potassium carbonate – is essential to commercial agriculture. It improves crop yield, taste, water retention, color, disease resistance and texture of food crops. Fruits, vegetables, rice, corn, wheat, soybeans and cotton all benefit from being grown in soil enriched with potash.

In the past few years, shareholders of the largest, profitable potash producers like Potash Corporation of Saskatchewan (NYSE:POT), The Mosaic Company (NYSE:MOS), and Agrium, Inc. (NYSE:AGU) were very happy campers. The stocks traded at PE multiples pushing 30 during the commodity boom of last year.

Not anymore: they’re all off more than 70% from 2008 highs. The financial distress that hit the rest of the economy in the fourth quarter of 2008 hit farmers too. When times are tough, farmers hunker down and cut costs. And one of their biggest expenses is fertilizer.

Most farmers typically have a large stockpile of potash on hand, and not buying on a regular basis causes them to use up what they have. You see, they can’t just stop fertilizing: many soils are overworked, or are marginal to begin with. If they scrimp or otherwise cut back on their applications of nutrients, yields suffer, and crop prices rise.

Once their penny-pinching became obvious to Wall Street, the already jittery markets didn’t need any prompting to hammer shares down to today’s low single digit PE’s, where they’ve remained since last October.

The problem facing the three companies mentioned above is that several big financially strapped potash producers in Russia have dropped prices 25%, putting pressure on others to do the same. This would have the effect of continuing to hold prices low.

It’s all being watched closely by China – one of the world’s biggest potash customers – who’s set to begin negotiations with the industry for its 2009 purchases. In response to the Russian action, Potash has cut production in order to keep prices from dropping through the floor.

The key here is to keep a watchful eye on crop prices. As they start to rise, farmers will jump on the bandwagon and fertilize more to increase their yields and make more money. And given that most are depleting current potash inventories, buying could soon resume in a big way, driving prices up once again.

Growing economies like the BRIC’s: Brazil, Russia, India and China are big potash users, and let’s face it: the world’s growing population will always need to eat.

Good investing,

Dave Fessler

View original at: Investment Advice and Investment Research with a Contrarian Point of View

(POT) Agrium, Inc.: Stock of the Day

by Matt Weinschenk, Senior Analyst, The White Cap Report

A Rare Bump for a Buyer…

What do a Wall Street analyst and a corn farmer have in common?  They both know that fertilizer prices have fallen off of a cliff.

Last year, a big increase in the demand for nitrogen-based fertilizers led the price of fertilizer and the value of the companies that make it, to triple-digit gains.

But when the commodities market cooled, fertilizers were no exception. Since then, the prices of fertilizer – and the companies that produce them – have dropped straight back to Earth.

Take a look…

That’s why CF Industries’ (NYSE: CF) recent announcement made such big news. Amid collapsing share prices and notoriously tight credit for mergers and acquisitions, CF Industries announced Friday an offer to buy out smaller-player Terra Industries (NYSE: TRA).

Terra Industries popped 27% on the news, and CF Industries rose 2.73%.  Normally, a buyer taking on a pile of debt to finance a deal that may or may not work out will see a little bit of a decline.

But two things are at play here:

1) The market thinks this is a good fit.

CF Industries expects to save $100 million over two years by combining forces. That’s nothing to sneeze at for a company that would have combined revenues just over $6 billion. This puts CF in position to maintain a much more competitive position over bigger players like Potash Corp. (NYSE: POT) and Terra Nitrogen (NYSE: TNH).

2) The future for fertilizer will be like the past.

Unfortunately, food production is going to be a major global problem for the next few decades. It will quite possibly be the biggest problem our species will ever face. And one of the only ways currently available to increase production is to load up on powerful nitrogen fertilizers. And since supply is finite, long-term prices have only one way to go.

Fortunately for CF Industries and other fertilizer companies, this spells profits. And for CF, the purchase of Terra Industries has likely improved their position to compete in that niche.

View original at: Investment Advice and Investment Research with a Contrarian Point of View

(CF) Stock of the Day: CF Industries (NYSE: CF)

Estimate Picture

Estimate have help steady in the last 2 months as analyst remain mostly upbeat about the company’s earnings. The current-year estimates is down a penny to $2.03 per share. Based upon this projection, this stock is reasonably priced, but trading at a premium to the overall market with a forward P/E multiple of 15X.

Fourth-Quarter Results

Scotts fourth-quarter results, reported in late October, were solid. Revenue was up 7% from last year to $544.2 million. One-time items hurt income, coming in at a loss of $34.7 million, an improvement from last year’s loss of $40.3 million. This produced a loss of 54 cents.

Regulatory Issues Resolved

The company said that its results were effected by a $10.3 loss on registration and recall costs and a one-time $13.5 million charge related to a write-down in the value of the company’s investment subsidiary Smith & Hawkins.

Scott ran into problems this year when the U.S. Environmental Protection Agency discovered that some of the company’s pesticides hadn’t been properly registered. With this calamity now behind the Scotts, the company anticipates moving back into profitability in 2009.

Full-Year Results

Full-year revenue came in at $2.98 billion, a 4% jump from the previous year.

The Chart

This stock has been steadily advancing since mid October, recently mvoing back to a key level of short-term resistance. Take a look below.

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(SMG) Scotts Miracle Gro – recently hitting a short-term level of resistance

Company Description

Syngenta is a worldwide agribusiness company with two main products: seeds and crop protection. The Switzerland-based company has employees in 90 countries and is the third largest producer in the high-value commercial seeds market.

On Dec 4, Syngenta and Dow AgroSciences announced a research and development agreement to evaluate current and future Dow AgroSciences compounds for incorporation into Syngenta’s seed treatment portfolio.

The companies will attempt to maximize crop vigor and yield in field crops and vegetables. Dow AgroSciences’ compounds will be used with Syngenta’s portfolio. Products resulting from the collaboration will be commercialized by Syngenta.

Sales Jumped 28% in the Third Quarter

On Oct 23, Syngenta reported third-quarter sales that grew by 28% at constant exchange rates and reported sales increased 33% to $2.3 billion.

Seed sales soared by 41% as sales of corn and soybean more than doubled due to strong growth in Brazil. Vegetables were also strong in all regions, especially Asia.

Crop Protection sales were no slouch either, rising 26% year over year due to volume growth of 12% and higher prices. Sales in Eastern Europe were 50% higher due to a drive to increase productivity. Latin America was also strong, especially in soybean and corn.

“The sales figures we have presented today attest to the strength of our business in a turbulent global environment,” said Mike Mack, CEO.

“The fundamental drivers for agriculture remain unchanged, with rising food and feed demand inevitably requiring increased use of agricultural technology in a context of limited land availability,” he said.

2008 Guidance Reaffirmed

Given the solid third quarter results, the company confirmed 2008 earnings per share guidance of 35% growth and reaffirmed 2009’s target of a gain in the high teens.

Consensus Estimates Rise for 2009

Given the company’s guidance, covering analysts are bullish on the full-year 2009. Consensus estimates are up 4 cents to $3.81 per share in the last 60 days. Analysts expect 2009 year-over-year EPS growth of 22.35%.

For 2008, estimates have fallen to $3.11 from $3.13 in the last 2 months. The company reports fourth-quarter and full-year 2008 results on Feb 2, 2009.

Share Repurchase Program Completed

Syngenta announced on Dec 30, 2008 that it had completed the share repurchase program authorized in April 2006. The total number of shares repurchased equaled 9.08% of outstanding shares at the time of the authorization for a total amount of $1.95 billion.

Value Fundamentals

Syngenta is a Zacks #1 Rank (strong buy) stock. It’s trading at 9.7x forward earnings. SYT’s price-to-book is 2.68. The company also pays a dividend, with a current yield of 3.90%.

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(SYT) Syngenta AG – shares repurchased equaled 9.08% of outstanding shares

Company Description

Monsanto is a leading global provider of technology-based solutions and agricultural products for growers and downstream customers, such as grain processors and consumers, in the agricultural markets. The combination of its herbicides, seeds and related genetic trait products provides growers with integrated solutions to more efficiently and cost effectively produce crops at higher yields, while controlling weeds, insects and diseases.

Its base business, led by Roundup and coupled with the latest tools in biotechnology, genomics and molecular breeding. Monsanto is based in St. Louis, has 21,700 employees, and carries a market cap. of $41 billions.

Estimates Climbing As Earnings Report Nears

Monsanto’s is ready to announce its first-quarter results for fiscal 2009 on Jan 7. The full-year consensus estimates have been rising consistently over the past 3 months.

Currently the average estimate is expecting earnings of $4.58 during 2009, up from $4.49 over the past 90 days. The consensus for 2010 is now $5.43, up from $5.16 over the same period of time.

These forecasts are calling for year-over-growth of 26% in 2008 and 19% in 2010.

Valuing the Growth

Shares of Monsanto are trading at fair valuations. The P/E of just over 19 times earnings seems on the high side, but with a 19% growth rate factored in, the PEG is 0.8. The industry average for PEG ratio is 0.6.

Acquisitions Completed

On Dec 2 Monsanto announced the completion of a proposed deal to acquired several Brazilian companies. The sugarcane and technology companies are operated by Aly Participacoes, which Monsanto purchased for $290 million in cash.

Carl Casale, EVP of global strategy and operations said “We look forward to working with our new colleagues at CanaVialis and Alellyx to combine our areas of breeding expertise to enhance yields in sugarcane, a crop that is vital to addressing growing global food and fuel demands.”

The Chart

Shares of MON have seen support around $65 per share after setting its 52-week low at $63.47. Take a look at the chart below.

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(MON) Monsanto Company – Estimates Climbing As Earnings Report Nears

Company Description

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality.

Rewarding Shareholders with Solid Income

The company recently declared a quarterly dividend of 24 cents per share. Monsanto noted that the dividend is payable on January 30 to shareowners of record on January 9. The dividend translates into a yield of 1.3%, which is better than the industry average.

Record results in the Fourth Quarter

Monsanto announced record net sales of $2 billion for the fourth quarter of fiscal 2008, a 35% increase from last year. MON noted that key drivers for the quarter were higher sales of branded Roundup herbicides and soybean seeds and traits.

Fourth-quarter earnings did come in at loss of 3 cents, but the result was narrower than the year-prior loss of 18 cents and 67% above analyst estimates.

Higher Estimates

Analysts are projecting earnings per share of $4.59 for the year ending August 2009. Three months ago, forecasts were at $4.48 per share. The current earnings estimate represents a 26% increase from the previous year’s result.

Favorable Industry Comparisons

Monsanto sports a return on equity (ROE) of 22%, well above the industry average of 5%. Earnings per share for MON are expected to grow by 23% over the next 3 – 5 years, versus the industry average of 15%.

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(MON) Monsanto Co – return on equity (ROE) of 22%, well above the industry average of 5%

Company Description

Compass Minerals is the largest producer of rock, or highway deicing, salt in North America and the United Kingdom and operates the largest highway deicing salt mines in these regions.

The company is also the third largest producer of general trade salt in North America and the second largest in the United Kingdom, serving major retailers, agricultural cooperatives and food producers.

In addition, Compass is the largest producer of sulfate of potash in North America, which is used in the production of specialty fertilizers.

Historic Quarter

Compass Minerals announced the best quarterly performance in company history on Oct 28. Earnings per share more than quadrupled coming in at 87 cents, up from just 20 cents one year ago.

Earnings from salt operations jumped to $237 million, a 47% increase. Sulfate of potash earnings spiked more than 400% to $42 million.

Sales rose an impressive 70%, driven by both price and volume.

A 64% Surprise

The earnings announcement took Wall Street buy surprise, beating the consensus estimate of 53 cents by 64%. It was the third surprise in the past 4 quarters.

Estimates are climbing, following the announcement. The current year estimate is $4.55, more than double the $2.09 earned in 2007. Next year’s consensus estimate is $7.53, a 65% increase of 2008 projections.

Expanding Subsidiaries

On Oct 30 Compass Minerals announced the formation of a new subsidiary, Pristiva Inc., which will focus on the salt water pool market, a $1.2 billion market in the U.S.

Salt water pools are easier on eyes, hair, and skin than standard chlorinated pools. They also require less maintenance and are “greener” than traditional pools. The market is booming as roughly 70% of new pools installed were salt water.

The Chart

The third-quarter earnings announcement acted as a catalyst to break shares of CMP out of its bearish trend. Take a look at the chart below.

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(CMP) Compass Minerals International – beat the consensus estimate of 53 cents by 64% – the third surprise in the past 4 quarters

Company Description

Compass Minerals International, Inc., through its subsidiaries, produces and markets inorganic mineral products in North America and the United Kingdom. It operates in two segments: Salt and Specialty Fertilizer. The company has a market cap of $1.85 billion and is headquartered in Overland Park, Kansas.

Third-Quarter Results

Compass Minerals reported third-quarter results on Oct 29 that were far ahead of analyst expectations. Revenue was up 70% from last year to $237.4 million. Net income totaled $28.7 million, a huge jump from last year’s results of $6.7 million.

This produced earnings of 87 cents per share, far ahead of analyst estimates of 53 cents. Over the last four quarters, Compass has trumped analyst estimates by an average of 18 cents, or 16%.

Supply Not Meeting Demand

Working in Compass’s favor is a tight relationship between supply and demand in a number of markets that the company serves. Compass CEO Angelo Brisimitzakis said that “Demand for highway deicing salt and sulfate of potash specialty fertilizer has continued to exceed supply.” Mr. Brisimitzakis also said that the company’s investment in production capacities should drive its long-term profitability.

Analyst Estimates

Analyst estimates have continued to tick higher, with the current-year estimate advancing to $4.35 per share from $4.22 in the last 7 days.

The next-year estimate is extremely bullish, pegged at $7.43 per share, a 71% earnings growth projection.

The Chart

Shares of CMP recently bottomed out below $40 and have since been on a big rally, climbing above $56. Moving forward, this stock looks well positioned for more gains due to its low valuations. Take a look at the chart below.

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#1 Ranked Stocks Highlight Archive
To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions.

(CMP) Compass Minerals International – 71% earnings growth projection