Fertilizer shares sprouted Monday after an analyst upgraded CF Industries (CF), Potash Corp. of Saskatchewan (POT) and others on an emerging “win-win” scenario.
Dahlman Rose analyst Charles Neivert said the large corn crop expected this year is already priced in to the fertilizers’ stock prices.
If that large yield occurs, the shares have limited downside, he noted, and should climb with the fall fertilizer application. But if weather or other disruptions make for a smaller harvest than the large planting suggests, then fertilizer shares could climb even higher.
“Either situation produces a positive outcome and that is the time to own the shares,” Neivert wrote.
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When he originally downgraded UAN (among others) to sell, just a few weeks ago, it absolutely smashed the price within about 4-5 trading days. I guess he used that opportunity to buy cheaper prices.