Can Mosaic Co (MOS), Potash Corp. (POT) Outperform in Current Environment?

And certainly, the company needs the momentum. Potash announced a 36 week shutdown across several potash mines, which is estimated to result in 13% less production and income (1.6 million tons) than the same time last year. The forecast for 2013 and 2014 EPS is for $3.20 and $3.05, respectively.

Conclusion

I believe much of the upside from an Israel Chemicals takeover has already been factored into Potash’s stock price. I actually don’t expect the company to get much of what it expects, since Israeli politicians have generally been pointed about a takeover’s impact on the Negev economy. So, if anything, there is some downside at this point. Moreover, Potash trades at a respective 16.4x and 13.7x past and forward earnings. By contrast, Mosaic trades at corresponding figures of 14.7x and 12.5x and is even forecasted for around a 200 bps greater growth rate at 7.6%. I recommend therefore buying shares of Mosaic to profit off of an equilibration in the multiples.

The article Can Mosaic, Potash Outperform in Current Environment? originally appeared on Fool.com and is written by David Gould.

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