Fertilizers (POT) (MOS) (CF) Now Buys?

Shares of Potash Corporation of Saskatchewan (NYSE:POT), The Mosaic Company (NYSE:MOS), and CF Industries Holdings (NYSE:CF) appear to have pulled back to good support, setting up what should be a good buying opportunity. This assumes there will be an uptrend coming soon.

Potash Corporation of Saskatchewan (POT) is the world’s best-known fertilizer stock, but it’s also known to be quite volatile, having peaked on February 14 at $63.96 before dropping as low as $50.25 last week.

The Mosaic Company (MOS) has the best-looking chart of the three fertilizer stocks as last week’s pullback tested the good support in the $73-$74 area and the November highs.

CF Industries Holdings (CF) may not be as well known as Potash or Mosaic, but it is a US-based, $9 billion fertilizer company. From the February highs at $153.80, it hit a low of $120.32 last week, which is a top-to-bottom decline of 21.7 percent.

Forbes' Tom Aspray suggests playing the three this way:

I would look to buy on a setback towards last week’s lows. For POT, go long at $52.80-$53.56 with a stop at $49.83 (risk of approx. 6.9%). Sell half the position at $61.22.

MOS should hold up better than POT if the market corrects. I would buy MOS at $73.20-$74.38 with a stop at $69.38 (risk of approx. 6.7%). Sell half the position at $84.77.

As for CF, I would buy at $122-$123.58 with a stop at $115.88 (risk of approx. 6.9%) and sell half the position at $138.77.

Potash closed Tuesday at $55.06, falling $0.80, or 1.43 percent. Mosaic closed at $76.21, dropping $1.03, or 1.33 percent. CF closed at $122.56, down $4.58, or 3.60 percent.




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