We got AGU wrong, it went roughly $20 higher than expected, but the other two , more or less right. If we HAD to own one of these, it would most definitely not be Agrium. All things being equal – they never are – we would prefer Mosaic in terms of potential. Actually we would prefer the market neutral pairs trade, short one AGU for long two MOS. Here is what that looks like;
See previous blogs. Taking a lot of time but ultimately it will get there, just like POT and AGU. All that is needed is a little regression to the mean.
We commented on this stock only once before, in early 2010 when the stock was around $70. At that time it had done two almost equal legs up from the lows which could have been the end of the correction. In hindsight the stock did go higher but not after first losing $30 or about 40% of its value.
Early this year the same thing occurred at around $90. As the retracement was now about 50% the chance of the correction coming to an end was far greater. Since then it has lost 1/2 of its value. The p/e is around 8, so very modest. Today they report a drop in income of 39% which would put the p/e around 13 or so, above the market average. Expect the stock to go down at least to the $39 level (B level in B-wave) and after that to new lows.
This company is in phosphates more than other fertilizers but the message is clear also for Agrium and Potash.
AGU and also POT and MOS with it have continued to drop and at least as far as Agrium is concerned the outlook does not look good. The stock dropped below the $61 level and this is a sure fire indication that the a-b-c perfectly symmetrical correction is over. The overlap with previous high points argues that the stock will go further down, most likely to new lows. See previous comments.
Mosaic has already overlapped and was not able to retrace to the 50%+ level at all and therefore looks even more fragile. Potash (not shown) is somewhere in between but also a sell.
