Potash Corporation of Saskatchewan (NYSE: POT), the largest North American potash producer, has been under stress, following the Belaruskali and Uralkali pressures. However, Potash shows a strong gross profit margin and below average debt-to-equity ratio, reports Vanessa Youngs for TheStreet.
“Potash Corp.’s high-quality, long-life potash reserves lie at the lower end of the cost curve, which should enable the company to withstand a protracted period of low potash prices,” Barnes added in the Financial Post article.
Investors can gain exposure to the agribusiness, fertilizer industry through the Market Vectors Agribusiness ETF (NYSEArca: MOO) or the PowerShares Global Agriculture Portfolio (Nasdaq GIDS: PAGG).
Potash is the largest holding in PAGG at 8.7% and makes up 6.5% of MOO. MOO also has a smaller 2.3% weight toward Uralkali.
Potential investors should be aware that agribusiness stocks and agricultural commodity prices may diverge. For example, environmental impact that causes low harvests and higher grain prices may also mean that farmers won’t have enough to pay for extra materials and equipment for the next season.
For more information on the agribusiness industry, visit our agribusiness category.
Max Chen contributed to this article.