When BHP Billiton Ltd. (NYSE:BHP) made its $38.6 billion offer for Potash Corp. of Saskatchewan, Inc. (NYSE: POT) recently at the same time wheat prices hit new highs, agribusiness and ag stocks got a lot of attention. Unfortunately, not all ag stocks got a price boost and not all are looking up.
Companies in the potash fertilizer did best. Potash Corp., of course, and Mosaic Co. (NYSE: MOS) got the biggest spikes, but CF Industries Holdings, Inc. (NYSE: CF) and Agrium Inc. (NYSE: AGU) also received a nice boost. Perhaps ironically, Intrepid Potash Inc. (NYSE: IPI) got a small boost on the BHP bid, but the stock has lost all that and more since.
For companies without potash, the news didn’t help much. Archer Daniels Midland Co. (NYSE: ADM) got a bump on rising wheat prices, as did Syngenta AG (NYSE: SYT), but only ADM was able to hold onto the gain. Monsanto Co. (NYSE: MON) saw a small stock price improvement on rising wheat prices, but the company has given the gain back and then some. The Market Vectors Agribusiness ETF (NYSE: MOO) has ended up pretty much where it started at the beginning of August.
The big share price gainer, of course, is Potash Corp. In the month of August, the company’s share price has risen 40% and set a new 52-week high. Year-to-date, the shares are up more than +35%. The mean price target is $146.81, mostly on analysts’ belief that BHP will have to pay more than it has already offered. Before BHP’s offer, Potash Corp. shares were up about +25% for the year, at around $112/share.
Mosaic, which is majority owned by privately-held agribusiness giant Cargill, has jumped about 20% since August 1st, entirely on the strength of its potash business. Shares closed yesterday at $57.25, above the mean price target of $56.83. The high target from the 18 analysts polled by Thomson/First Call was $80, which is a remote possibility, but not impossible.
CF Industries set its 52-week high back in March, after fighting off a takeover bid from Agrium and before paying $4.6 billion for fertilizer maker Terra Industries. CF’s share price is virtually unchanged since January, having made a comeback from a 52-week low in June. The mean share price target is $97.91, more than $6/share above yesterday’s close.
Agrium shares are up about +13% year to date, mostly due to its failure to acquire CF Holdings. Sad perhaps, but true. The mean price target for Agrium shares is $77.74, about 12% above yesterday’s closing price. The stock’s 52-week high is $73.85.
Intrepid Potash posted its 52-week high of $34.20 back in January and set its 52-week low of $19.08 in late June. The mean price target for the shares is $26.15, not far from IPI’s closing price yesterday of $22.58.
ADM’s mean price target is $35.60, about +17% above yesterday’s closing price. The company’s share price depends more on corn, wheat and ethanol prices than it does on fertilizer. Year-to-date, ADM’s share price is down about -2%.
Syngenta shares are down about 19% since the beginning of the year. The company has no fertilizer component, but produces herbicides and seeds and professional products. The mean price target is $53.08, about 16% higher than yesterday’s close.
The sorriest story is Monsanto, which has suffered from slowing sales of its Round-up herbicide and of its Round-up Ready seed. The company’s 52-week range is $44.61-$87.06, and its mean price target is $63.21. The company lowered its 2010 earnings target today and the shares are getting hammered, down about -5.5%.
What appears to have made the most positive difference to these ag stocks concerns which end of a takeover bid the company was on and whether or not potash was a big part of the product mix.
Fundamentally, nothing else has changed much, and the outlook does not include explosive growth.
As of this writing, Paul Ausick did not own a position in any of the stocks named here.
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