I thought Potash was a great company but heading in a downward spiral sooner or later. I just don't trust this whole ethanol industry stuff, not with oil prices dropping and farmers relying on subsidies, which in turn go into Potash's coffers. Fertilizer. I just can't deny it any more. Ethanol seems about ready to stay, and Potash makes great fertilizer. I can't hold a grudge. Potash deserves an A- rating, not a B+. Here's a look at the Q2 numbers.
• P/E 33, forward P/E 21, PEG 2.38
• Profit margin: 20.1%
• Operating margin 28%
• Return on equity 22.9%
• Quarterly revenue growth (yoy) 47.9%
• Quarterly earnings growth (yoy) 63%
• Operating cash flow $1.4 billion
• Levered free cash flow $620 million
The only negative is total debt ($1.4 billion) while total cash is $449 million. But it is manageable with so much growth and revenue coming in.
Interestingly enough, I read a month or so ago that phosphorus supply is in decline and the world might be out of the stuff in 50 years. Phosphorus is used in fertilizer, so this is a potentially killer problem. No kidding.
Guess what? Phosphorus is plentiful in human urine. The first Co to develop phosphorus out of the wee-wee on a huge scale gets kudos from me. Or maybe I'll develop the concept, build a Co and go public. Name: Liquid Gold. Ticker: PEEE.
Potash will probably beat me to it.
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