Wednesday, October 27, 2010

Agrium (NYSE:AGU), CF (NYSE:CF), The Way to Play Corn says Soleil

With corn, and by extension - nitrogen fertilizer, rising in price, the best way to play the sector is through Agrium (NYSE:AGU) and CF Industries, says Soleil Securities.

Soleil initiated coverage on Agrium with a "Buy" rating, saying they have an attractive valuation.

"In addition to CF Industries (Buy), we view Agrium as a way to play corn through nitrogen fertilizer...Ag-flation is back. The macro environment is favorable due to low interest rates and a weak dollar. Crop prices are up an average of 50% since June 30 on production-negative and therefore price-positive USDA grain reports ... Even after a 70% move since June 30 compared to a 12% gain in the S&P 500, the shares are now selling just at 12.7x our above-consensus EPS estimate of $6.83 per share."

Agrium Closed Monday at $88.53, gaining $1.31, or 1.50 percent. Soleil has a price target of $100 on them.

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