Mosaic Co (MOS), Potash Corp./Saskatchewan (USA) (POT), Agrium Inc. (USA) (AGU): Is This the Perfect Time to Buy These Companies?

But, in the long term, these companies benefit from plenty of trends and industry dynamics. One, their moat is fairly unbridgeable. Starting a potash mine is complicated and costly, as PotashCorp explains:

In Saskatchewan, we estimate it would cost CDN $4.2 billion to bring into production a new conventional 2-million tonne per year greenfield potash mine and mill, which would take a minimum of 7 years lead time to bring to production. This figure does not include infrastructure outside the plant gates, such as rail, road networks, utility systems, port facilities and potential fees to purchase reserves, which could increase the cost to more than CDN $6 billion.

Two, a growing world population needs more food and desires more meat, all of which requires more fertilizer. Global fertilizer consumption increased 27% from 2001 to 2011, and the Food and Agriculture Organization estimates demand growing at 1.9% per year through 2016.

Planting the seed
The out of favor fertilizer stocks were blindsided by industry relationships outside of their control, but they still make money. While a future fall in potash prices will hurt, once market sentiment turns around, I believe the battered stocks will be a safe place for a steady return. The only question is when this will happen.

The article Is This the Perfect Time to Buy These Companies? originally appeared on Fool.com and is written by Dan Newman.

Fool contributor Dan Newman has no position in any stocks mentioned. The Motley Fool recommends Sociedad Quimica y Minera (ADR).

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.