Potash Corp. Earnings Shouldn't Peak Until at Least 2011

When looking at Potash Corp.'s (POT) value as a publicly traded company, I think that many are missing why they are much more valuable then their current valuation. Many believe that the fertilizer stocks have been driven up just like many of the commodity stocks. Commodity stocks have had a run as the dollar has devaluated, but there is one large difference with respect to fertilizer: people have to eat. Food is a basic necessity such as heat and water and as the world's population increases its intake of meat, it will continue to increase demand for feed which is comprised mostly of corn. The basis against fertilizer is generally ethanol, as it is currently using approximately one-third of the United States' corn crop.

Another important factor with respect to many of the agricultural stocks is that they are not the boring stocks of yesterday, but more of a technology play. Look at Monsanto (MON) and their 'Roundup Ready' products. The reason farmers use Monsanto's seeds are because they raise yield. This is important, because if you have already maxed out your farmland, the only way to increase your crop is through increasing yield. This is where fertilizer comes into play as its sole purpose is to add nutrients and increase yield. If you look at many of the emerging markets, many of these countries such as China and Brazil have very low yields when compared to the United States and Canada.