1 value stock near 52-week lows worth buying
TRANSCRIPT
1 Value Stock Near 52-Week Lows Worth Buying
5 solid reasons Potash Corp. is a buy
Fertilizers: A business with tremendous potential
Daunting challenge ahead
Data source: FOA. Graph source: PotashCorp
Answer to tomorrow’s problem
The challenge: Feeding a rapidly growing population even as arable land shrinks.
The answer: Fertilizers, as they provide essential nutrients to soil that improve crop productivity.
The significance: Fertilizers account for nearly 50% of the global crop production today.
Potash Corp.: The global leader in fertilizers
World #1
Position as of August 31, 2014. Data source: Fertecon, CRU, IFA, Potash Corp. Graph source: Potash Corp.
World #1
Potash Corp. is the world’s largest fertilizer company, producing all three primary nutrients -- potash, nitrogen, and phosphate. It is the largest potash producer.
Potash Corp.’s potash capacity is projected to jump 27% this year, thanks to expansions. That should secure its leadership position in the long run.
Strong growth despite macro challenges
Cash flows heading north
Source: Potash Corp.
Fertilizer markets turning around
Macro headwinds may have dented Potash Corp.’s bottom line in recent years, but its cash flows continue to grow.
Even in a challenging business environment, Potash Corp. expects to earn $1.75-$1.92 per share this year, compared to $1.82 earned in 2014.
Cash flows to expand further
Capex
Source: Potash Corp. BMO Capital Markets Farm to Market Conference presentation, May 2015
Free cash flows
Potash Corp. is in the last leg of a major multi-year expansion program costing nearly $8.4 billion.
With its capital expenditures expected to taper in coming years, Potash Corp. could generate significant free cash flows.
Shareholder returns: Solid and growing
Rewarding shareholders a priority
Source: Potash Corp. Annual Report 2014
Great growth potential
Quarterly dividend growth: More than 11 times since 2010.
Current dividend yield of 5.5% -- the best in the industry.
Greater potential free cash flows should mean higher dividends in the future.
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