What is your opinion on AG stocks ?

Question

Are they still good buy's at current levels ? I use agstocks.blogspot.com to learn details on all AG stocks. They have the top stocks for 2008. Are they good ? Thanks.

Answer 1

I look at charts a lot and I think these charts stink. If you take, say, Agrium or Potash, they look like they're in a freefall. What I don't like to see a parabolic rise, followed by a sudden series of big moves down.

I know the fundamentals seem flawless. But at least I'd wait. I don't think there's any hurry.

It is usually true that when a new stock market cycle begins, it isn't the old winners that are the leaders.

Answer 2

I agree that the charts look "scary" to say the least, but the fundamentals still hold up. And remember that growth is in excess of 2-3x the PE ratios of all of these stocks, yielding a PEG ratio that dwarfs nearly all companies.

AGU, based on street estimates, has a FY08 PE ratio of about 10 and FY09 of about 7.5. With estimates continually being revised higher because of an insatiable demand for potash, there is no reason to think the business line is slowing at all. Even if growth completely halted, the stocks are fundamentally a good buy.

POT FY08 PE is about 17 and '09 at 10. CF has same PE's as AGU.

Right now these stocks are experiencing a moderate correction in price, but it is likely just an opportunity. My advice would be to buy at/near the stocks' 200 day moving averages as support is likely to be very strong there. Scaling into those levels is advised.