Apr 29, 2011

Posted by in Commodities, Penny Stock Alerts | 0 Comments

AGU Stock

AGU Stock Ready to Harvest Gains

Everything’s been coming up roses for Agrium Inc. (AGU:NYSE) since we alerted the Calgary, Alberta-based fertilizer company in the spring of 2010. Things are so rosy, in fact, that the company’s shares (Ticker NYSE: AGU) have soared in upward of 60-70%…eyeing the $100 whole number pps since our publication regarding the Ag’s cheap, discounted share price.

AGU Stock

AGU stock may not be dirt cheap any longer, but the stock isn’t expensive and could continue to rally. Several analysts whose portfolios are about 5% invested in fertilizer shares, say the outlook for Agrium is “more stable” now than at the stock’s prior peak, as prices will continue to appreciate and stay higher for longer.

Agrium has been benefiting from near record prices for farm commodities, driven by rising demand and poor weather. The U.S. Department of Agriculture recently slashed its estimates of corn stocks by 9%, to 675 million bushels, and estimated  that farm income would rise 20% this year. The company, with a market value of $15 billion, could benefit from both developments.

Profit is expected to rise by 64% this year, to $7.38 a share, which means AGU Stock trades for 13.1 times earnings.

That is below the price/earnings ratios of its competitors, and well below the company’s average five-year P/E of 18.

Although AGU stock and other fertilizer companies in general are not cheap we feel in comparison towards other investment choices, like cash or bonds, they are still much more lucrative overall.

If AGU stock continues to impress, it seems like it’s returns could keep investors well-fed for several more months to come!

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