If you’re going to start your ad off with a line like this:
“One Stock is the Difference between a Good 2011 and a Rolling-in-the-Dough 2011 … AND YOU DON’T OWN IT!”
Well, you’re going to get the Gumshoe’s attention. I haven’t had a good “roll in the dough” since Scrooge McDuck invited me over to his Money Bin for some coin-swimming.
And even better, this teaser is all about one of the hottest “story” topics in investing right now: agriculture. So let’s find out what’s being teased, shall we?
The ad is from Robert Hsu, who used the “China’s demanding more meat” argument to pitch fertilizer stocks in his China Strategy a couple years ago, too … and this ad is more of the same basic spiel. Here’s an excerpt:
“3 Reasons to Buy This Fertilizer Giant With Both Hands
“I get it. The world’s fertilizer business is about as exciting as watching paint dry. But give me five more minutes, and I guarantee you’ll be calling your broker immediately.
Three reasons why:
“Inflation: Global inflation is here….
“The result is driving food, energy and other commodity prices to new highs. In fact, the UN Food and Agriculture Organization reported that its food price index popped 4.2% in December. And China’s food prices alone spiked 10.3% in January….
“… as China’s inflation soared over the past seven months, this fertilizer company’s shares surged 100%!
“Chinese Demand: China has more than 1.3 billion mouths to feed, and they want meat….
“The USDA reported that farmers paid a 14% increase for fertilizers in the first 11 months of 2010, while wholesale fertilizer prices surged even more rapidly.
“Takeover Target: The global commodity industry is consolidating. The fertilizer industry, in particular, is ripe for buyouts. And despite its status as the third-largest fertilizer company in the world, our pick is a prime takeover target.
“The reason why is simple: Potash already rejected a near-30% buyout offer from BHP Billiton, and Mosaic is already majority-owned by Cargill. That leaves our stock with a bull’s eye on its back.”
So … that’s probably enough for some of you intrepid Gumshoes out there to identify the stock, no? Third biggest fertilizer company, not Potash Corp or Mosaic … but wait, I have to keep the mystery alive for a few more moments so I can share a couple more clues that Hsu tosses out for us:
“The company just posted a 426% surge in net income, a 90% pop in profit and a 60% jump in revenue for the fourth quarter. And the company is expecting tight fertilizer supplies (potash, nitrogen and phosphate) in North America and nutrient crop price increases to jump-start prices in 2011.
“Yet, it’s trading at a 20% price/earnings discount to its top three competitors: 24X vs. 30X to 34X.”
And he even tosses in a few other opinions for us:
“JP Morgan just raised its 2011 estimates for this company and maintained its “overweight” rating.
“UBS recently reiterated its ‘Buy’ rating on the company and upped its price target.
“Fortune magazine revealed that this company is one of the ‘Top 10 Stocks for 2011,’ and is looking for these 10 stocks to boost their profits an average of 61% this year.”
And of course, like his colleague Louis Navellier, Hsu tells us that he simply can’t reveal this top secret name because too, too many people follow his words (OK, it’s his copywriters saying this — who are probably the same copywriters who write Navellier’s ads … but still). Hsu’s version of this is:
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