consolidation phase in north america

Buyout Gives Fertilizer Makers Another Boost
December 03, 2007: 08:05 PM EST

Dec. 4, 2007 (Investor's Business Daily delivered by Newstex) --

Fertilizer stocks rallied Monday on takeover news, lifting an industry group that continues to assert leadership among big caps.

Agrium AGU, a leader in the Chemicals-Fertilizer group, is buying agricultural products distributor UAP Holdings UAPH for $2.65 billion including debt. Agrium, with a market capitalization of about $8 billion, isn't in this week's IBD Big Cap 20 list, but two other industry leaders are.

Mosaic MOS is in buying range after rebounding off its 10-week moving average. The stock is near a 72.90 buy point 14d is in range until 76.54.

Plymouth, Minn.-based Mosaic offers phosphate, potash and nitrogen -- three key fertilizer ingredients. It also sells industrial and livestock feed products.

Mosaic's earnings exploded 667% and 386% in the past two quarters. Its sales growth has also accelerated for four straight periods. But its return on equity was a light 9% for the latest fiscal year and annual pretax margin isn't impressive.

Potash Corp. of Saskatchewan POT is just off a record high after another bounce off its 10-week average. The stock already has had multiple rebounds off the line.

The Canadian firm is the world's biggest fertilizer maker by capacity. Earlier this month Potash said it would spend $1.8 billion to expand a mine and mill.

Staying with the agricultural theme, Deere & Co. (NYSE:DE) DE is hovering near record highs after regaining its 10-week average. But the stock is extended from a 160.59 buy point.

Deere recently delivered a 57% jump in fiscal Q4 earnings.