Potash Fueled By High Prices

The Potash Corporation of Saskatchewan Inc. (POT), a Canadian corporation based in Saskatoon, Saskatchewan, is the world’s largest fertilizer enterprise producing three primary plant nutrients potash, phosphate and nitrogen.

On October 23, Potash reported 2008 third-quarter earnings of $3.93 per share. Fueled by significantly higher prices for all potash, nitrogen and phosphate products, gross margin for the third quarter grew to a record $1.7 billion, up from $475.1 million in the third quarter of 2007.

Potash Corp. has benefited from higher fertilizer application rates, higher crop plantings and increasing demand for biofuels. Rising fertilizers prices, especially potash will expand POT’s margin. The company’s manufacturing plants are located in low cost areas and its financials are solid. However, high raw material prices force us to rate the stock a Hold with a target of $70.

Report by Paul Raman

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