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A Deere, a Cat & a Titan All Stuck in the Headlights (DE, CAT, TITN)

Deere & Co. (NYSE: DE) shares are going to be a drag today.  The giant manufacturer of farm and construction machinery posted $1.74 EPS on a 19% revenue fain to $7.47 Billion.  First Call had estimates at $1.75 EPS and $$7.61 Billion in revenues.

The company said that equipment sales are projected to increase about 20% for Q3 and up about 20% for Fiscal 2008.  Included in the forecast is about 5% of currency translation impact for the year.  Its previous guidance of +17%. 

The company has noted that rising material costs and the availability of various parts and components will pressure results for the rest of 2008. 

This can't be a shock to anyone, except maybe that it wasn't even worse, but Deere is looking for a 3% drop in equipment tied to housing and forestry.

If agriculture infrastructure companies can't out-pace materials costs in the current Ag-trade environment, then what does this tell you about investing in that sector from here with new money after this sector has seen huge gains????

Deere shares are down almost 6% at $84.92 after closing at $90.19 yesterday; its 52-week trading range is $56.50 to $94.89.

This is also pulling shares of Caterpillar Inc. (NYSE: CAT) down by about 1.25% at $83.00 in pre-market trading; its 52-week trading range is $59.60 to $87.00.

But the real impact from this is going to be in Titan Machinery Inc. after its hugely successful post-IPO trading. Titan owns and operates full service agriculture and construction equipment stores. Its shares are down over 3% at $20.25 pre-market; and its post-IPO range is $11.50 to $24.50.

Jon C. Ogg
May 14, 2008

Food Prices High Through 2010

Usually the White House does what it can to hide bad news. It is rule of politics never to admit troubling information. Hurts the party and national morale.

Odd then, that the Administration is owning up to the idea that food prices could stay high for a long time.

According to Reuters "High global food prices are likely to linger for two to three years while the world replenishes food stocks, senior White House officials said."

Much of the blame is going to the use of corn for biofuels instead of food. That part of the logic may be true.

But, the White House still hates to give out awful news, so it is wise to take what is said and double it. That would translate to food prices rising sharply for four to six years.

Douglas A. McIntyre

After Huge IPO, Titan Goes Acquiring (TITN)

Titan Machinery Inc. (NASDAQ:TITN) has been one of the best IPO's since the end of 2007, and its ties to agriculture machinery are to thank.  Recently, shares saw some pressure after it disclosed a secondary offering around the end of the lock-up period, but now the company has another announcement entirely.

The company has announced today that an agreement to acquire Mid-Land Equipment Company, L.C. has been signed. Mid-Land owns six dealerships in Iowa and Nebraska and earned $48.3 million in revenues in fiscal Dec-2007. The Fargo-based full-service agricultural and construction equipment store operator will own 48 stores after the completion of the transaction, which is expected to close May 30, 2008 pending customary closing conditions

Shares of Titan are up 2% to $20.57 in late morning trading. The post-IPO trading range is $11.50 to $24.50.

You can also sign up for our open email distribution list to see about other secondary offerings, IPO's, break-ups, spin-offs, and more.

Rachel Lopez
May 12, 2008

An Agriculture Peace Corps: Cutting Food Prices

China will begin to encourage companies within its borders to buy farmland abroad. The world's most populated country sees it as a way to lock in food supply. According to the FT "A proposal drafted by the Ministry of Agriculture would encourage domestic agricultural firms to make the offshore acquisitions, with the focus on South America and Africa."

The countries where China makes its investments may not like the idea. They may need the yield from the land to make up for their own food shortages. But, money talks, and China will likely get its way, at least in part.

The news raises the question about whether the US government should look to a similar program, with less immediate, but longer term benefits. The global food shortage is fueling inflation in the US as the prices of everything from bagels to coffee are driven through the roof by shortages. The Fed and other bodies are now more concerned about inflation than they are the crisis in the credit markets. Oil prices, coupled with the rising price for agricultural goods, could do the US consumer great harm.

The US is the largest exporter of agricultural products. Even the cost of the yield of crops here is rising sharply. Some of that is due to corn being used for ethanol and other alternative fuels. Some is simply due to global demand.

The US is especially adroit at growing food. To some extent that is expertise and to some extent it is because of genetic seed development which creates bountiful crops which glow in the dark. But, they do feed the hungry and the farm animals which produce milk and meat. So far, although the seeds come from laboratories, they do not appear to be harmful.

The US has the opportunity to buy land overseas as well, or give tax benefits to US companies that do. Using the ingenuity of the American farmer and the gift of genetic alterations, the yield from foreign land could undoubtedly be improved.

None of the production from the crops need come to the US. Companies here could make modest profits on the farming, but the selfish reason to do it is to help the pocketbook of the American consumer.

Douglas A. McIntyre

Secondary Takes Air From Titan's Sails (TITN)

Titan Machinery (NASDAQ: TITN) had been one of the best performing IPO's since the end of 2007.  The owner and operator of full service agricultural and construction equipment stores in North America.  As you can imagine, the ties to agriculture have made this one a winner.

Monday, the company reported fourth quarter and fiscal results. Revenue increased by 61% from $84.0 million a year ago to $135 million this quarter. They posted a net income of $270,000, or $0.02 EPS, meeting guidance. The company recently signed an agreement to acquire Quad Country Implement, a single store in Iowa. Titan raised its 2009 outlook for revenues and earnings per share. Excluding the stock offering filed today, the company would have 13.8 million shares outstanding, for guidance estimates of $0.87 to $0.92 EPS in 2009.

The company now plans to issue 3 million shares of common stock and selling stock holders are planning to sell an additional 500,000 shares. They intend to use the proceeds from the offering to fund potential acquisitions of CNH agricultural and construction equipment dealerships or for general corporate purposes. Additionally, they may invest the proceeds in short to medium term interest bearing securities. The interest will be used for the above purposes.

The company began trading publicly December 6, 2007 at $8.50 per share. The share price has risen to the lower twenties.

The underwriters for the offering are listed as Craig-Hallum Capital Group and Robert W. Baird and Co. They have been given the option to purchase 525,000 shares for over-allotments.

Shares for Titan are down almost 13% after 90-minutes of trading to $19.38 on heavy trading volume. The post-IPO range is $11.50 to $24.50.

Rachel Lopez
April 29, 2008

Andersons Does Small Roll-Up Acquisition (ANDE)

The Andersons, Inc. (NASDAQ: ANDE) is making a niche acquisition to fit into its fertilizer operations.  It has acquired Douglass Fertilizer & Chemical Inc. as an addition to its Plant Nutrient Group to diversify the group's product line offering.  It will also expand Andersons market "outside the traditional Midwest row crops and into Florida's rich specialty crops."

Douglass Fertilizer is based in Maitland, Florida and is primarily a specialty liquid nutrient manufacturer, retailer and wholesaler.

Douglass Fertilizer is a specialty liquid nutrient manufacturer and retailer primarily serving Florida and to a lesser degree the Southeastern U.S. and the Caribbean; and it generated revenues of $48 million in 2007.

As fas as a comparison, Andersons Inc. generated some $2.379 Billion in revenues during 2007.  Depending upon the expansion that the company can make with a deeper pocketbook, that's only about a 2% revenue bump. 

The Anderson's market cap is $843 million and with a $46.50 stock price is toward the higher-end of its $38.10 to $52.67 trading range over the last year.

You can join our open email distribution list to hear about previews for other mergers, spin-offs, break-ups, IPO's, special financings, and other special situations.

Jon C. Ogg
April 29, 2008

Potash Corp. Earnings Kick Ag (POT)

Potash Corporation of Saskatchewan Inc. (NYSE: POT) scored a win with earnings.

The potash and fertilizer giant posted $1.74 EPS, a gain of 181% year over year and a gain of 50% sequentially.  Revenues came in at $1.89 Billion for the quarter.  First Call had estimates pegged at $1.52 EPS on $1.67 Billion in revenues.

Potash noted that the pressure to increase global food production has continued to drive demand for potash, phosphate and nitrogen.  It also noted that this pushed prices for all three nutrients to new highs.  Each segment contributed record gross margin, and cash from operating activities prior to working capital changes in Q1 reached a record $625.5 million. 

It has also shown price increases across the board and it is significantly hiking its guidance (with assumed parity of Canada/US Dollar).  Its prior Q2 guidance is now $2.20 to $2.50, while First Call estimates are $2.27.  Its old target of $6.25 to $7.25 for the full year is now in a range of $9.50 to $10.50 EPS, while First Call is at $8.62 EPS.

CEO Bill Doyle's comments here show the belief that this is a not just a fad, but on that will be a norm:

• "The global need to increase food production is real and immediate, and it will be a part of our world for the foreseeable future...... It took nearly a decade to empty the global grain cupboard and we can't refill it overnight..."

We had noted in our full preview that the company would have to orchestrate another "beat and raise" to keep everyone happy after this exponential share growth.  This looks like that and then some.  So far shares are indicated up about 3% or 4% pre-market after closing at $204.12 yesterday and the 52-week trading range is %58.87 to $215.97.

The only issue we'd bring up is that shares are currently trading at or above many of the official stated price targets from Wall Street analysts.  They will have to play catch-up one way or another.

Jon C. Ogg
April 24, 2008

Investors Brace For Potash Earnings (POT, MOO)

Thursday morning, we'll get to see earnings out of Potash Corp. of Saskatchewan, Inc. (NYSE: POT). The estimates for the potash producer from First Call are $1.52 EPS on $1.67 billion in revenues.  Next quarter estimates are $2.27 EPS on $2.34 billion in revenues. Estimates for fiscal Dec-2008 are $8.62 EPS on $8.29 billion in revenues.

Analysts have an average price target north of $200.00, and the 52-week trading range is $58.87 to $214.84.  Shares closed down $10.71 today at $204.12.  With all the upgrades seen in late 2007 to early 2008, it's either time for analysts to increase targets or make their "valuation" comments now that shares are above many price targets even though the ratings are still very positive.

These potash and fertilizer stocks have run up with such fervor that investors will not accept any "weak economy" comments or any in-line guidance, particularly after the recent huge price hikes were announced to China.

Its conference call will not be until 1:00 PM EST Thursday, which gives it little competition among investors since most post-earnings conference calls will be completed by then.

We've already seen competitor earnings, but this is one of the key stocks out of the potash group.  The Market Vectors Global Agribusiness ETF (AMEX: MOO) is what we'll be watching most closely for the secondary effect.

We recently featured a hidden asset play that may actually be its own company after a spin-off IPO in the fertilizer sector to subscribers of our Special Situation Investing Newsletter as a bonus issue.  It isn't a potash play as the company has a low-cost advantage for nitrogen fertilizer products, but anything tied to fertilizer in the U.S. has seen shares rocket over the last 12 months. 

Stay tuned as this has been the hottest sector around. 

Jon C. Ogg
April 23, 2008

Intrepid Potash IPO Set To Trade (IPI)

Last week, Intrepid Potash Inc. (NYSE: IPI) went from a hot IPO to a scorcher in the agriculture and fertilizer sector.  That was after the price target and share offering were hiked considerably.  The original range was $24.00 to $26.00 for 24 million shares.  Then the range went to $27.00 to $29.00 for 30 million shares.

Now this IPO has priced 30 million shares at $32.00 per share, and it is probably safe to assume that the 4.5 million shares earmarked for the overallotment will be exercised.

Goldman Sachs, Merrill Lynch, and Morgan Stanley were the final joint-book running managers of the offering with RBC Capital Markets and BMO Capital Markets Corp. listed as co-managers  in the deal.

You can join our open email distribution list to hear about other IPO's, key financings, secondary offerings, spin-offs and other special situation previews.

Last night on CNBC's MAD MONEY, Jim Cramer came out with his own play book for this hot IPO.   While we do not like seeing IPO's get touted like this before they even come public, he did at least note the cautious side of the trade as well rather than all bullish calls.

The first indications seen this morning were around $40.00, although this can easily go higher or lower by the time this one actually opens.

Jon C. Ogg
April 22, 2008

Jon Ogg is a producer of and editor for both the Special Situations newsletter and the "10 Stocks Under $10" weekly newsletter for 247WallSt.com; he can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Intrepid Potash Touted Pre-IPO By Jim Cramer (IPI, POT, MOS)

The soon to price IPO of Intrepid Potash (NYSE: IPI) is a hot upcoming IPO that we have covered as "hot to scorcher" because of the steady rising and hikes seen in potash and fertilizer prices.  We covered how the company raised its share offering and raised its total share offering.  Tonight the now would-be "scorcher" just got the pre-IPO bump from Jim Cramer on CNBC's MAD MONEY tonight that will probably create even more interest tomorrow.

While we don't like seeing IPO's getting "made even hotter" before they price, he did at least make some caveats on this hot agriculture and potash sector.  He said he has parameters and you should not pay more than $34.00 per share in the after-market for this IPO.  He thinks it should go much higher than that but you can't just chase up indefinitely. He also said he isn't exactly happy about the "use of proceeds" that the company is using essentially buying out its parent and then paying down debt with about 10% of the proceeds.

He thinks that Intrepid Potash could earn $1.24 EPS in 2009, and thinks it deserves a 55% premium to the 17-times 2009 at Potash Corp. of Saskatchewan (NYSE: POT) because of its pure-play and because of its proximity to where the mines are located as opposed to Canadians. That was how he came up with the $34.00 level.  Cramer also noted The Mosaic Company (NYSE: MOS) in this sector.

You can join our open email distribution list where we cover IPO's, back door plays into IPO's, secondary offerings, spin-offs, special financings, M&A, and other previews for special situations.

Jon C. Ogg
April 21, 2008

Jon Ogg is a producer of and editor for both the Special Situations newsletter and the "10 Stocks Under $10" weekly newsletter for 247WallSt.com; he can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Intrepid Potash Hiked IPO Terms, From Hot To Scorcher (IPI)

Intrepid Potash Inc. is soon to be pricing an IPO, and the "hot status" was just confirmed.  With all the hype and pricing power of anything tied to potash, nitrates, fertilizer, and anything tied to Agriculture, this was a foregone conclusion.  The company issued an amended IPO filing with the SEC showing that it boosted the size of its planned IPO to a level that will now be over $1 Billion.

The Denver, Colorado-based potash producer hiked the size of the offering to 30 million shares from 24 million.  If things weren't good enough, the company also hiked its estimated price range to $27.00 to $29.00 from a prior range of $24.00 to $26.00.

The NYSE has approved its "IPI" stock ticker.  The underwriting group is all large household names with Goldman Sachs, Merrill Lynch, Morgan Stanley, RBC Capital Markets, and BMO Capital Markets listed as underwriters.  The underwriters now have an overallotment option to purchase up to 4.5 million additional shares rather than the 3.6 million shares originally indicated.

You can join our open email distribution list to hear about other IPO's, back door plays into IPO's, spin-offs. break-ups, and other special situations we frequently preview.

Fertilizer is starting to taste so good for investors that you might start seeing Fried Fertilizer fast food joints soon.

Jon C. Ogg
April 17, 2008

Jon Ogg can be reached at jonogg@247wallst.com.  He is a producer and editor of the Special Situation newsletter and the "10 Stocks Under $10" weekly newsletter for 247Wallst.com; he does not own securities in the companies he covers.

Canpotex Owners Surge On Potash Price Hikes For China (POT, MOS, AGU, MOO)

There was a significant agreement out of Canada between it and China, via Canpotex (Canadian Potash Exporters).  Canpotex is the world's largest exporter of potash.  Canpotex announced potash price increases between Canpotex and Sinofert in China, which actually will be paid out the rest of 2008.

This calls for shipment of 1 million metric tons of potash at $576 per metric ton, which appears to be a $400 per metric ton increase over the 2007 price.

This is going to add significantly again to fertilizer and potash players involved, and all are trading higher in pre-market trading.  Companies which own Canpotex are Mosaic Inc. (NYSE: MOS), Potash Corp. of Saskatchewan Inc. (NYSE: POT), and Agrium Inc. (NYSE: AGU).

Pre-market movers are:

• Mosaic Inc. (NYSE: MOS) up over 3.7% at $132.40, above the $129.93 high over the last 52-weeks.
• Potash Corp. of Saskatchewan Inc. (NYSE: POT) up 4% at $184.41, 52-week range is $58.87 to $185.49.
• Agrium Inc. (NYSE: AGU) up over 4.5% at $82.70; above the $80.67 high over the last 52-weeks.

These are actually up enough that they are moving the key ETF, the Market Vectors Global Agribusiness ETF (AMEX: MOO) by over 2% to $61.50.  That 52-week trading range was $40.19 to $60.62.

Where is that IPO from Intrepid Potash?

You can join our open email distribution list to hear about other IPO's, back door plays into IPO's, spin-offs. break-ups, and other special situations we frequently preview.

Jon C. Ogg
April 16, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Agria, A Suit & A Dismal IPO (GRO)

Chinese-based agriculture solutions provider, Agria Corp. (NYSE: GRO) issued a statement this morning noting that the company will strongly defend itself against the class action suit filed against them for alleged violations of the S.E.C. Securities Act of 1933.

The complaint filed by the law firm of Schiffrin Barroway Topaz and Kessler alleges that the company did not disclose pertinent information during their IPO in November of 2007. Specifically, the suit alleges that company failed to disclose negotiations being conducted with the COO and other executives for compensation packages and this led to financial statements after the IPO that were not analogous to those filed in the prospectus.

As stated above, Agria plans to vigorously defend itself against any and all allegations of this nature. Whether or not the company violated rules is still an outstanding, but the dismal post-IPO is so bad you'd think the company has been sued every day of its operations.

Shares are down over 8% in early morning trading to $4.35. The 52-week range is $4.03 to $17.00. The company’s IPO share price was $16.50.  When you see performance like this, the initial assumption is that maybe the company should have never been public at all.  When you take into consideration that it has agriculture and China in it, then you really have to wonder why it has failed so horribly.

You can join our open email distribution list to hear about special financings, secondary offerings, IPO's, M&A, and more previews for other special situations in various stages.

Jon C. Ogg
April 14, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Intrepid Potash Sets IPO Terms (IPI)

Intrepid Potash, Inc. is getting closer to its upcoming IPO. The company set the terms in its amended IPO filing this morning. The filing shows an offering of some 24 million shares at a maximum proposed share price of $26.00, totaling $717 million maximum aggregate proceeds. The actual price range for shares is listed as $24.00 to $26.00 for the IPO and the company has applied to trade on the New York Stock Exchange under the ticker "IPI."

The underwriting group is listed as Goldman, Sachs & Co., Merrill Lynch & Co., and Morgan Stanley.  Co-managers are listed as RBC Capital Markets and BMO Capital Markets.

We previously discussed Intrepid's business and market position from an earlier filing.  Given the gains seen currently and the strong guidance in anything tied to the fertilizer or potash industry, this IPO is one we'd expect to be oversubscribed.

You can join our open email distribution list to hear about other IPO's, back door plays into IPO's, spin-offs. break-ups, and other special situations we frequently preview.

Jon C. Ogg
April 7, 2008

After Mosaic Earnings, Fertilizer Tastes Better Than Chicken (MOS, MOO)

Shares of Mosaic Co. (NYSE: MOS) are surging pre-market after beating its earnings expectations.  The company posted a record posted a record $520.8 million in net income, translating to $1.17 EPS from $2.15 Billion in revenues.  First Call had estimates at $0.95 EPS.

Mosaic also said that its phosphate selling price would jump over the next three months by up to 48% to $720 per metric ton, up from an average of $487 per metric ton this last quarter.  Its sales volume was maintained at 2.2 to 2.4 million metric tons.

These high prices are more than offsetting cost increases for its raw materials needed to make potash.  The company is benefiting from worldwide demand for for fertilizers and potash.  As the global population grows and as the rest of the world's living standards rise, the demand for more grown food and agriculture keeps rising and rising.

Mosaic shares are up 8% at $112.90 in pre-market trading right before the open.  its 52-week trading range is $27.25 to $119.78.  The numbers were strong enough that the Market Vectors Global Agribusiness ETF (AMEX: MOO) ETF was even indicated up 3% at the same time.

Soon they'll be opening all you can eat Chinese buffets all over the world.

Jon C. Ogg
April 4, 2008

Monsanto Acquires European Seed Company (MON)

Monsanto Company (NYSE: MON) has just announced that it has signed a definitive agreement to acquire De Ruiter Seeds Group B.V., in The Netherlands.  This is a Dutch-holding company that owns and operates De Ruiter Seeds.  The total transaction value was placed at 546 million Euros, or more than $800 million depending on currency exchange rates after backing out the net debt.

Monsanto has been an acquirer of many smaller seed companies in the U.S. and internationally.  The company expects this to build upon vegetable seed business as well as to enhance its growth in the protected-culture segment, which is listed as the fastest-growing space within the vegetable seeds industry.  This acquisition of De Ruiter is expected to help transform Monsanto's vegetable seed platform into a $1 billion revenue business by 2012.

As a reminder, Monsanto reports earnings this week.  We just did an earnings preview for it and another ag-player.

Monsanto shares are down some 2.5% today at $111.36.

Jon C. Ogg
March 31, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Agriculture Earnings Duel: Mosaic vs. Monsanto (MOS, MON, MOO)

This week we'll get to see two important earnings reports out of agriculture leaders.   Wednesday we’ll get to see earnings out of Monsanto Co. (NYSE: MON). Two key calls of late are that Goldman Sachs raised its sector expectations for the group with key earnings visibility.  Jim Cramer has also been staying high on agriculture. 

The estimates from First Call on Monsanto Co. (NYSE: MON) are $1.69 EPS on $3.56 billion in revenues.  Next quarter estimates are $1.29 EPS on $3.69 billion in revenues. Estimates for fiscal Aug-2008 are $3.18 EPS on $11.04 billion in revenues.  Monsanto did just recently guide higher because its stock had come off of highs considerably.  Analysts have an average price target of $139.00, and Monsanto's 52-week trading range is $53.95 to $129.28.  Since the end of 2007, Monsanto shares are up about 3%.  Its market cap is now roughly $62 Billion.

Friday we’ll get to see earnings out of Mosaic Co. (NYSE: MOS). The estimates from First Call are $0.95 EPS on $1.92 billion in revenues.  Next quarter estimates are $1.55 EPS on $2.55 billion in revenues. Estimates for fiscal May-2008 are $3.90 EPS on $9.01 billion in revenues. Estimates for fiscal May-2009 are $7.40 EPS on $12.23 billion in revenues.  Analysts have an average price target north of $122.00 and Mosaic Co.’s 52-week trading range is $25.95 to $119.78.  Since the end of 2007, Mosaic shares are up about 11%.  Its market cap is now almost $47 Billion.

On Monday, the USDA gives the Clarence Beeks crops report showing total numbers of acreage expected to be planted, and this may create many last minute revisions to each earnings report for anything tied to agriculture suppliers from seed to machinery to transportation.  As these companies are key contributors to the cop growers, these agriculture firms should already have at least a rough estimate of what is likely.  Lastly, investors may want to watch the Market Vectors Global Agribusiness ETF (AMEX: MOO) as the key ETF in the sector.  Of the total estimated percentage of the ETF's assets, Monsanto comprises 8.4% of assets and Mosaic comprises 8.5% of the assets.

Jon C. Ogg
March 30, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Monsanto Raises Guidance, Right Ahead of Earnings (MON, MOO)

Monsanto (NYSE: MON) has just raised its guidance for earnings per share and for free cash flows.  The company is now projecting $3.15 to $3.25 EPS for fiscal-2008 targets, up from its prior guidance of $2.70 to $2.80 EPS.  It does note that its as reported EPS will be in a range of $3.38 to $3.48 for the full year.  Free cash flows are now being put at approximately $1.4 Billion, above the $900 million to $1 Billion previously offered.

For the coming quarter it sees $1.75 in ongoing EPS, although its as reported EPS in the range of $1.98.

The second quarter, and therefore the full year, will be favorably affected by a $0.23 item from a settlement of Monsanto's claim in conjunction with Solutia's emergence from bankruptcy.  First Call estimates are listed as $1.35 EPS for the quarter and $2.87 EPS for the fiscal-August 2008 year-end.

Upside contribution is coming from its seeds and traits business, along with Roundup and other herbicides.  Much of this strength is based on the previewing of the Northern Hemisphere planting season.  Gross profits from its seeds and traits business is running ahead of plan and is now expected to show 20% growth with gross profits of $3.6 to $3.7 Billion. Roundup is now expected to show $1.7 to $1.8 Billion in gross profits.  Monsanto is now expected to achieve its original target of reaching a 52% to 54% gross margin by 2010 two years ahead of schedule.

Monsanto says that it will continue to look for ways to invest in acquisitions that further growth, and it cash flows support the current business' growth and dividend and share-repurchase programs.  Earnings will formally be announced on April 2, 2008.

If you ever wonder why companies issue their guidance just days ahead of the formal date, it is often because the shares have pulled back.  Shares closed down at $104.26 yesterday, but that is down from recent highs of $129.28.  So far it appears to be working, as shares are up 9% to $113.70 in pre-market trading.

This raised guidance was strong enough that it is also helping out the ETF in the Agriculture sector, as the Market Vectors Global Agribusiness ETF (AMEX: MOO) is trading up 2.3% at $54.76 in pre-market trading.

Jon C. Ogg
March 25, 2008

McDonald's (MCD), Sara Lee (SLE) And Wheat

The price of wheat has gone up three-fold in ten months. For something that looks like a weed, that is an impressive run.

Since a large number of business from McDonald's (NYSE: MCD) to Sara Lee (NYSE: SLE) to Kraft (NYSE: KFT) have a lot of wheat-based products, inflation in the grain is hardly good news.

In many enterprises, the cost of commodities can be passed on to consumers. In a recession, that becomes somewhat more difficult. Who is willing to buy a $15 Big Mac or $20 box of cake mix? All the money that might go toward those items is already being spent on $4 a gallon gas.

Since the price of wheat is not going to drop, at least not any time soon, it is worth reconsidering investments in fast food chains like Starbucks (NASDAQ: SBUX) and Burger King (NYSE: BKS). Supermarkets may see some margin hit as well.

Even prison stocks like Corrections Corp (NYSE: CXW) may be bothered. The cost of bread and water has just gone up.

Douglas A. McIntyre

Agriculture ETF Wars: Commodity ETF Beats Stock ETF (MOO, DBA, TITN)

Investors seem to not be able to get enough when it comes to investing in agriculture now.  This used to be a dead boring sector but it's now the top performer with earnings visibility and with raised earnings expectations soaring.  Last year we saw an agriculture ETF get launched via the Market Vectors Global Agribusiness ETF (AMEX: MOO).  This has seen a monster gain with the ETF being up almost 50% at one point since coming public last September.

What is interesting is that ETF's often get duplicated or see similar ETF launches.  As it turns out, the "MOO" ETF was the "other" ETF.  The PowerShares DB Agriculture Fund (AMEX: DBA) has actually been around longer, although it is a commodity ETF rather than ETF full of stocks that stand to benefit from agriculture trends.  The "DBA" has also outperformed the "MOO" by quite a margin. It's even more actively traded.  The DBA" tracks the Deutsche Bank Liquid Commodity Index- Optimum Yield Agriculture Excess Return, which is composed of futures contracts on some of the most liquid and widely traded agricultural commodities like corn, wheat, soy beans and sugar.

The "MOO" is up from its $41.30 first trade to $55.10 on today's close, which is up more than 33%.   The "DBA" is up from its $26.72 open the same day to $41.99, which is a 57.1% gain.  That's about the same gain as a year ago too. 

Jim Cramer recently gave his big picks to benefit from rising commodity prices.  This is always a bit of a stump when one ETF in the same group does so much better than its rival.  After all, these are deemed the new mutual funds.  But the gains in many of the commodities have been what has helped the actual stocks inside the "MOO."

When you look over the best IPO's of recent months, the best or second best so far is Titan Machinery Inc. (NASDAQ: TITN) with roughly a 100% gain from its $8.50 IPO price from early in December.  There was a recent hot-sounding IPO filed and there was also spin-off IPO that is coming down the pipe in the agriculture sector, and that may create more buzz around a sector that has been hotter than most would have guessed. 

Trends can continue beyond what the doubters would ever guess.  Just always remember that after a huge run up like this, nothing lasts forever.  Caveat Emptor.

Jon C. Ogg
March 12, 2008

Cramer Hunts For Safe Harbor in a Storm: DuPont (DD)

Cramer went out tonight on CNBC's MAD MONEY still looking for safe harbors in a storm, despite the strong market today and despite his noting that this trading rally could last 5 days. 

His pick tonight was DuPont (NYSE: DD) that he thinks should say good things at its conference Friday, and may even raise numbers.  With it having a large agriculture play, he thinks that is good.  Cramer noted how this is a reinvention of a company as its seed business is so strong.  He even noted that the company could announce it is spinning off the agriculture business.  He did note that he would only buy half of his position after today's run and hope for lower prices Thursday.

• If you go way back in time, this was a call he said was a "four horsemen of the weak dollar" pick and you can compare his other picks in there for that.
• Last year he also gave this one a $55 target, although the 52-week range is $41.26 to $53.90.

Last night his safe harbor for the storm pick was Genentech (NYSE: DNA).

Jon C. Ogg
March 11, 2008

US Pushes Bio-fuels Into Europe

According to The Guardian "The US is flooding Europe with subsidised biofuels that threaten to destroy Europe's domestic refining market, the head of the biofuel company D1 Oils warned today as its shares lost a third of their value."

They should be happy it may bring down the cost of gas.

Douglas A. McIntyre

Goldman Sachs Hikes Ag/Fertilizers (MOS, MON, MOO)

Goldman Sachs has come out positive on two companies that overlap in agriculture and fertilizer plays this morning, and it has raised estimates and targets:

• The firm recently visited Monsanto (NYSE: MON) and it notes that the recent pullback gives an attractive buying opportunity.  The company is the beneficiary of market share gains for both Dekalb and ASI brands, and its triple-stack is still a must for corn farmers. It also noted sharp increases in Roundup prices.  Goldman Sachs noted a significant boost for 2008 earnings.  It raised estimates by $0.10 to $2.95 for 2008 and raised 2009 estimates by $0.05 to $3.65 EPS.
• It also has a call on The Mosaic Co. with fertilizer fundamentals to remain tight in the medium term.  It noted that farmers are more concerned with maximizing yield rather than cost control issues.  With phosphate prices in upward trend, Goldman Sachs is also hiking targets: raised 2008 EPS by $0.19 to $3.90; raised 2009 EPS by $1.30 to $7.30; raised 2010 EPS by $0.80 to $7.45.  The firm has also lifted its price target on Mosaic to $135 from $120.

On a macro call, Goldman Sachs actually sees corn plantings declining any acreage increasing, with a rapid adoption of biotech traits.  If one person has been behind anything related to agriculture, it is Jim Cramer and you can see his new agriculture pick for $16 corn/wheat or you can see his top five picks for the agriculture group here.

We still note that if you want to pursue the whole agriculture theme but do not want to have the risks associated with picking one stock and taking any company execution risk versus the sector, you can look at the Market Vectors Global Agribusiness ETF (AMEX:MOO).

Jon C. Ogg
March 6, 2008

Jim Cramer's Play On $16 Corn & Wheat (POT, MOO)

Jim Cramer came out on CNBC's MAD MONEY tonight, predicting huge gains in agriculture prices and in gold.  Unlike Basketball's March Madness and a "Sweet 16" his "sweet 16" targets all revolve around "$16" for the commodity.  Cramer said he is making some key changes to some of his stocks picks in each of these sectors.

His first theme is agriculture.  He thinks agriculture is being thrown through the roof because of ethanol.  Cramer thinks that corn goes $16 and wheat goes to $16.  He has been very positive on this one over and over and here were his last picks.  He wants to switch gears and you should go into Potash of Saskatchewan (NYSE: POT) because of severe pricing power.  He loves the high barriers to entry and lack of competition.  We also had a recent IPO get filed in this sector.  He noted that consensus estimates are 107% in 2008, and with a fair earnings multiple that stock could see significantly higher prices.  If you are still unsure about picking individual stocks in this sector, we would note that you can look at the ETF for the agriculture play that is the Market Vectors Global Agribusiness ETF (AMEX: MOO).

Cramer is also talking up some new picks he has for gold and also in higher gas prices. 

Jon C. Ogg
March 3, 2008

Cramer On Agriculture, Interviews Deere CEO (DE)

On tonight's MAD MONEY on CNBC, Jim Cramer wanted to feature agriculture by interviewing Deere & Co. (NYSE: DE).  If you want to own a company that wins off of food for fuel and the that wins off of agricultural machinery, Cramer said you want Deere & Co. (NYSE: DE).  He noted that this is up 149% since he started recommending it in 2005, and the company outperformed on last earnings.  Last night he discussed some of this in a Hillary Clinton interview, and he also gave his five favorites earlier this week to profit off of agriculture.  He interviewed Bob Lane, CEO of Deere, and here are the paraphrased answers:

Why is there sustainability this time in a boom and bust historical business?
People around the world are doing better and when they do better they eat better.

As far as emerging markets?
The company can help improve and can deliver ag equipment to many, and there is a secular change of people wanting to eat better.  There will be ups and downs, but the change is here to stay.

As far as alternatives and the price of grain, are you concerned that prices can only go down?
There will be changes in price, many down, but one-quarter of the world is doing significantly better and demand will stay strong.

As far as twin tailwinds from ethanol and worldwide rising up of people who want better food, which is more important?
The growing demand for food is more important, but biodiesel and other food for fuel matter.

As far as candidates not liking NAFTA, are you not concerned that NAFTA could change?
The large combine in Illinois ships one-quarter of the units outside of the U.S., and without global markets many customers are not prospering any more.

Cramer said you have his blessing to BUY Deere stock anywhere below $100.00, because you'll keep making money with this one long after the show.  Deere shares closed up 0.8% today at $86.97, and shares were up marginally at $87.40 after the interview.  Its 52-week trading range is $51.59 to $94.77.

Jon C. Ogg
February 28, 2008

CVR To Spin-Off Fertilizer Partners LP Unit in IPO (CVE, CVI)

CVR Partners, LP has filed to come public via an initial public offering, and it will have the proposed ticker of "CVE" on the NYSE.  The prospectus calls for a sale of 5.25 million units, and that is before a 787,500 unit overallotment. 

CVR partners is a limited partnership formed by CVR Energy, Inc. to own and operate a nitrogen fertilizer facility and develop a diversified portfolio of assets that are complementary to its business and CVR Energy’s refining business.  Its nitrogen fertilizer business produces ammonia and urea ammonia nitrate fertilizers.

This is a spin-off of CVR Energy, Inc. (NYSE: CVI), which it is reliant upon for management and for many key areas of operation.  Upon the closing of this offering, CVR Energy will indirectly own approximately 87% of the outstanding units.

The company generated net sales and operating income of $173.5 million and $71.0 million for 2005, $170.0 million and $43 million for 2006, and $187.4 million and $48 million for 2007.

Jon C. Ogg
February 28, 2008

Cramer Stays High on Agriculture (MON, POT, AGU, DE, MOS, MOO)

On CNBC's MAD MONEY tonight, Jim Cramer went over the agriculture sector.  We recently noted ourselves about Ag-flation as wheat prices have more than doubled over the last year.  Cramer noted that Cargill suspended plans for a new ethanol plant.  Cramer says that this is going to create a sell-off, but it won't mean the sector is dead and will create buying opportunities.  He thinks the famine watch may end up with rationing to keep a lid on prices in a world where demand is rising rapidly.  The possible famine and growing demand for food and crops for energy is driving these.  After these stocks take a share price hit this week, he wants you to look at buying some of these that are still at the start of a multi-year trend as now our food supply is competing for energy.  His favorite stocks right now in the sector are:

• Mosaic (NYSE: MOS) as a potash winner with major pricing power.
• Potash (NYSE: POT) as another potash winner with major pricing power.
• Agrium (NYSE: AGU) also in nutrients and fertilizers like Potash.
• Monsanto (NYSE: MON) as the biotech of Agriculture.
• Deere & Co. (NYSE: DE) for the machinery.

We would also note that if you are a true lover of agricultural trading, there is an ETF that tracks this sector called  Market Vectors Global Agribusiness ETF (AMEX: MOO), which is up 50% since its launch just 6-months ago.  You would also want to know that Four of his five top picks in that group above are in the top ten holdings in this ETF. There are many other Agriculture pieces here, and some are Cramer and some are not:

• Cramer very recently noted FMC Corp. as his hidden value agriculture trade.
• He also talked about Ag-flation before, although that isn't as fresh.
• Here were the 2007 relevant comments into 2008 where Cramer said he sees Ag and Solar winning.
• You can also see his "wild bull market picks" in the sector from last year to see which he likes and walked away from.
• You can also see a pending hot IPO in the sector called INTREPID POTASH.
• We also featured Titan Machinery before it was added to the IBD 100 index.

Jon C. Ogg
February 26, 2008

Brother, Can You Spare A Loaf Of Bread?

Soon a loaf of bread will be more expensive than a Krugerrand. The price of gold may be rising, but the price of wheat is up more and going up faster.

"Wheat has more than doubled since May, reaching a record $11.53 a bushel on Feb. 11," according to Bloomberg. That is nothing but bad news for everyone everywhere with the possible exception of farmers.

Wheat may be a better measure of inflation than oil. It is used in a wide variety of human foods worldwide and it is also used for livestock. That means inflation by the ton. While the Fed tries to fight a slowdown along with central banks in other parts of the world, the biggest concern is that low rates may drive inflation. The cost of wheat and other grains is driving inflation all by itself. Lower interest rates are not helping at all. Rate may even have to be moved up if wheat and other commodities fuel inflation.

China said its inflation rate was just over 7% in January. But, the cost of food moved up over 15%. The same trend is likely to hit the US because of wheat and milk prices. Fundamentally, prices for grain and food are being decoupled from interest rates.

The other danger of rising grain prices is that the cost of alternative fuel goes up, in particular biofuels. They may seem like a neat way to drive down oil prices over time. That does not work if biofuel costs more than oil.

Economists will argue that the leading indicators of how things are going should be interest rates and oil prices.

That is wrong, The real indicator is wheat.

Douglas A. McIntyre

FMC Corp.: Jim Cramer's Hidden Agriculture Trade (FMC)

On tonight's MAD MONEY on CNBC, Jim Cramer wanted to review a hidden undervalued stock in  the market.  Tonight he noted FMC Corp (NYSE: FMC) as a key undervalued stock in chemicals and agriculture.  While he likes the company on its own, he noted that the current inflated prices in Agriculture and potash stocks should actually generate a much higher stock price.  He thinks that because of this company's pricing power in its its niche that this should be worth a combined $5.7 Billion instead of $4+ Billion today.  In his words, that yields a $70 STOCK.

By now you have seen this sector on fire.  We just noted a hot potash IPO coming soon and just yesterday we noted how the best post-IPO in recent months is also in the sector.  Deere (NYSE: DE) shares indicated lower after earnings this morning and closed lower too.

Just remember one key thing.  Thursday is Valentine's Day, and fertilizer is only a good gift if your intimate other is a green thumb that hasn't been able to get to the store in a very long time.

FMC closed up 2.2% at $53.54 today and the 52-week trading range is $35.64 to $59.00.  $70.00 would be a considerable price.  While it still is listed as having a 30+ P/E ratio, this really trades with a 13.8 P/E ratio for fiscal Dec-2008 forward estimates.

Jon C. Ogg
February 13, 2008

AMENDED IPO FILING: Intrepid Potash

Intrepid Potash, Inc. is closer to an IPO as it filed an amended IPO filing this morning. The targeted proceeds from common stock issuance are not specified, however, it has applied to trade on the New York Stock Exchange. The underwriting group is listed as Goldman, Sachs & Co., Merrill Lynch & Co., and Morgan Stanley.

Intrepid Potash claims to be the largest potash producer in the United States and supplies an average of 8.5% of potash consumption in the U.S. annually and 1.5% globally. Potash is composed of potassium, one of three essential nutrients for agriculture. Significant barriers to entry exist in the industry because deposits are rare and geographically concentrated. Intrepid owns 5 potash production plants in New Mexico and Utah with the capacity to produce 1.2 million tons of potash each year. They plan to expand production by 370,000 tons per year over the next 5 years. Increased demand for potash, combined with a limited supply, recently increased prices dramatically. In the last 3 months, Intrepid saw prices increase by 80%, up to $397 per ton. They reported net sales of $140.1 million and net income of $23.1 million at an average of $185 per ton for the nine-month period ended September 30, 2007.

With demand projections likely to continue to increase and Intrepid’s strong position in the potash market in the United States, this may be one IPO that actually goes public and comes out as a hot IPO despite the recent wave of IPO withdrawals.

• If you look at the TITAN MACHINERY post from yesterday out of our IPO INDEX you will see how hot anything to do with agriculture is.

Rachel Lopez
February 13, 2008

Deere Beats Earnings, Shares Indicated Lower (DE)

Deere(NYSE: DE) posted earnings at $0.83 EPS versus the First Call estimate of $0.78 EPS.  Its revenues rose 17.5% from Q4-2006 to $5.2 Billion versus $5.07 Billion consensus.

As far as guidance, Deere noted that equipment sales should increase by about 17% for full-year in 2008 and should be up approximately 23% for the second quarter. Deere's net income is forecast to be about $2.2 billion for the year and in a range of $700 million to $725 million for the second quarter.  The company did realize gains from currency of roughly 3% of the sales increase for both periods.

Deere shares closed up over 2% yesterday to $86.48 and shares are down roughly the same amount in early pre-market trading at $84.25.  The 52-week trading range is $51.26 to $94.77.

Jon C. Ogg
February 13, 2008

Best Recent IPO: Titan Machinery (TITN)

If you have been following our IPO index over the last few weeks you have probably noticed that many IPO's are being withdrawn "due to market conditions" or that SPAC IPO's are coming out more than ever.  But there are actually some bright spots out there in IPO's.  Titan Machinery, Inc. (NASDAQ: TITN) is a post-IPO stock that has been on fire.

Titan owns and operates a network of full service agricultural and construction equipment stores, it might not come as that much of a surprise.  Three years ago or more no one cared about any of these agriculture plays, but now with ethanol, China, India, Africa, Latin America, biodiesel, switchgrass, a hearty appetite to stuff our bellies, commodity traders, and every other issue chewing up everything we can grow, this is one of the hottest sectors in an otherwise crummy market.  It's almost as though every farmer in Africa, Asia, and Latin America can suddenly buy up the world's food supply and spend unlimited amounts on machinery and ag services.

This one came public in early December so it's only about 60-days old.  Craig Hallum and Robert W. Baird were the only underwriters, so it is likely that this won't get the largest or strongest analyst following.  But traders don't mind, and in fact you might think they prefer it.  Baird started this with an Outperform rating in mid-January at the peak of the market sell-offs when everyone was negative daily.  But out of the end of 2007 IPO's, this one appears to be the leader in percentage gains.  This priced at $8.50, and has traded in a range of $11.50 to $18.50.  Today shares are up almost 4% at $16.85.

As of last look this had only 205,272 shares in the short interest, which is close to 1.0 days to cover.  The market cap as of last look is $225 million.  Traders who love agriculture obviously love this one.  Investors who got shares at the IPO are up nearly 100%, and any investor who bought on the heels of its IPO are up close to 50%.  Not bad for this market.

Jon C. Ogg
February 12, 2008

Archer-Daniels-Midland Set For Earnings (ADM, VSE, PEIX, AVR)

On Monday, we’ll get to see earnings out of Archer-Daniels-Midland Co. (NYSE:ADM). The estimates from First Call for the agriculture giant are $0.74 EPS on $12.65 Billion in revenues.  Estimates for fiscal June 2008 are $2.70 EPS on $52.27 billion in revenues.

Analysts have an average price target of $47. If Friday's closing prices are any indicator and if the earnings were coming out immediately, it appears that options traders would be pricing in a move of up to $2.00 in either direction.

We've covered this one before, although we were skeptical of any buyout rumor.  We still are, although a buyer would have done well in the stock. As a $29 Billion company and one of the larger beneficiaries of ethanol, we'd be watching some of the other ethanol stocks like Andersons Inc (NASDAQ: ANDE), Aventine Renewable Energy, Inc. (NYSE: AVR), Cosan Limited (NYSE:CZZ), BioFuel Energy Corp. (NASDAQ: BIOF), Pacific Ethanol (NASDAQ: PEIX), US BioEnergy Corporation (NASDAQ:USBE), VeraSun Energy Corp (NYSE: VSE), and others.

Archer-Daniels-Midland’s 52-week trading range is $31.28 to $47.33.

Jon C. Ogg
February 2, 2008

Crops & Ag Pulling Back; Buying Opportunity Or Just Starting? (MOS, POT, MON, BG, ADM, MOO)

When you see sectors that have been key leaders fall it's often just another buying opportunity.  But when you start seeing an exodus you have to wonder if letting the good times roll is smart. In this market there are very few safe havens. That is particularly true if new valuation metrics being reevaluated come true.  Enter agriculture and fertilizer.  The charts on these are not indicating any major uptrend violations, although by now you know they never do until they already have (sorry for the redundant jab).

The potash sector has been hot until today.  Today, shares of Mosaic Co. (NYSE: MOS) is leading the sector lower with a 6% drop to under $103.00, up from a 52-week lows of under $20.00.  Potash Corp. of Saskatchewan, Inc. (NYSE: POT) is down over 3.7% at $144.50, although its 52-week low is $45.82.

Monsanto (NYSE: MON) is down almost 2% to $124.85, and its 52-week low is $50.01.  Share of Bunge Ltd. (NYSE:BG) are down 3.3% to $128.55, up from its 52-week low of 70.97.

Maybe with the DJIA trading down another 200 points there just aren't any safe havens.  Even the core defensive go-to stocks have been trading lower today and we noted some higher valuations starting to look like a premium at the time.

Archer-Daniels-Midland (NYSE: ADM) is bucking today's trend as it is down less than 0.4% at $45.00, up from a 52-week low of $30.46.  The fairly new ETF in the sector is the  Market Vectors Global Agribusiness ETF (AMEX: MOO), and it is down some 2.8% to $57.76.  Since coming public late in 2007 it has traded as low as $40.19 and as high as $59.49, so it isn't exactly looking like hard troubles are setting in yet.

The ethanol competition for food is a real one and most of these fertilizer and potash companies have discussed major pricing power.  We'll be keeping an eye on this sector as this has been perhaps the brightest spot in the market that traders have traditionally ignored.

Jon C. Ogg
January 15, 2008