Potash Corp - not the greatest quarterly update as noted below in an excerpt from the statement:
$POT: "revised full-year expectations for our potash business... lowered our sales volume guidance...weaker volumes and pricing" #potash
However the company's presentation document was a corker including this fascinating observation about the longer-term linkage between potash consumption and crop production:
Back to shorter-term reality. As with other mining stocks (and let's face it this is agricultural mining) one key is the divided signalling. On this basis I found this chart useful:
$POT getting whacked as they pulled back hopes. Interesting slide deck inc. useful div/capex chart. $20 interesting?
Potash Corp have blotted their copybook with a sloppy bid for K+S but thinking about the 5%+ yield which appears sustainable as per the above does make me think that a contrarian opportunity is building for what is a low cost producer who can shut down expansionary capex if they wish. A round number US$20/share support point?
Praxair - short and sweet on this one:
Industrial gases is such a solid business. $PX put up solid numbers as shown below. Not cheap but quality.
Because of the raw material pass-through pricing and global oligopolistic nature of this capex-intensive (at least initially) business the industrial gases business has always attracted me. Historically I have always favoured Air Liquide the French-listed player (link here). Stocks in this space always look a touch expensive at high teens EV/ebit ratios but essentially any sell-off should be bought. I noted at the above link sub Euro110 for Air Liquide whilst for Praxair that law-of-round-numbers US$100 level is the equivalent. Worth remembering in any future time of strife.
Still +ve gap between price/mix and raw materials. Sub x8 EV/ebit and a double digit FCF yield. -6% = bit rude $GT
Regular readers of Financial Orbit will know I have a bit of a soft spot for the tyre industry as historically it has proved to be a performance friend. The last time I wrote about Goodyear I noted the attractions of the stock below a US$30 share price:
'So at just below x7 EV/ebit the shares don't feel too expensive...even if they are nearer the top rather than the bottom of the recent trading range (slightly unclear from the chart below but they currently trade in the US$29s). My instinct: quite interesting despite the debt'
With the shares trading just above the US$30 level I am watching the stock - currently generating record margins and having slightly tweaked up EMEA sales expectations for 2015 in the results just released - for possible purchase. Sub US$30 despite the pension debt still feels good risk-reward.
Finally on a couple of gold stocks:
My favoured gold equity remains the excellent $GOLD but noteworthy that both $NEM & $ABX showing a bit of form after not too disastrous qrts
As I noted here back in February, Randgold Resources remains my favoured larger cap gold equity play and over the last year it has materially outperformed both Newmont and Barrick Gold as shown in the two graphics below:
Both the latter two companies are trying a bit harder today. Newmont noted falling all in costs...
...and lower net debt:ebitda now than a peer group which includes Barrick Gold (but not the net cash on the balance sheet Randgold):
And guess what Barrick Gold also talked about?
All of this is great and if - as I believe is plausible - gold outperforms over the next year or so these stocks will make money too. However for me their fundamental investment case does not remain as clear as that for Randgold with higher grade, a stronger balance sheet and still very exciting and not fully discounted exploration/new production scope. Nevertheless gold equities should do well from here.