September 21, 2006:Nova and Agrium...chemistry?
Two chemical stocks that I have looked at a few months ago appear to be good candidates for potential purchase. They are Agrium,Inc.(AGU) and Nova Chemicals(NCX).
Agrium management has stated in the past few days that nitrogen prices have held up well, in large part due to increased demand internationally (especially India).The nitrogen fertilizer market should be excellent due to the demand for more yield and acreage for corn as ethanol becomes a more important portion of the U.S (and other) nation's drive to secure safe and predictable fuel supplies. Agrium has also added an additional 310,00 tons of potash capacity, bringing its total capacity to 2.1 MM tons. An additional 350,00 tons will be available annually beginning next year. The Royster Clark acquisition was an accretive success. Agrium is also focusing on higher margin fertilizer combinations and, perhaps, looking at further acquisitions to more fully penetrate international markets. Their web address is www.agrium.com.
The stock trades around 25.00.
Nova Chemicals may have more upside than Agrium. Trading at around 32.50, this stock may well reach into the mid-40s over the next several months. The company has a big cost advantage in ethane being produced in Alberta. Also, ethylene fundamentals will improve given limited capacity expansions in Iran and other MidEast countries.
Companies that had been stockpiling ethylene have depleted their reserves. Nova has very good management and is technically in a good buying position for the investor.
Their web address is www.novachem.com.
Agrium management has stated in the past few days that nitrogen prices have held up well, in large part due to increased demand internationally (especially India).The nitrogen fertilizer market should be excellent due to the demand for more yield and acreage for corn as ethanol becomes a more important portion of the U.S (and other) nation's drive to secure safe and predictable fuel supplies. Agrium has also added an additional 310,00 tons of potash capacity, bringing its total capacity to 2.1 MM tons. An additional 350,00 tons will be available annually beginning next year. The Royster Clark acquisition was an accretive success. Agrium is also focusing on higher margin fertilizer combinations and, perhaps, looking at further acquisitions to more fully penetrate international markets. Their web address is www.agrium.com.
The stock trades around 25.00.
Nova Chemicals may have more upside than Agrium. Trading at around 32.50, this stock may well reach into the mid-40s over the next several months. The company has a big cost advantage in ethane being produced in Alberta. Also, ethylene fundamentals will improve given limited capacity expansions in Iran and other MidEast countries.
Companies that had been stockpiling ethylene have depleted their reserves. Nova has very good management and is technically in a good buying position for the investor.
Their web address is www.novachem.com.
posted by T @ 9/20/2006 11:33:00 PM
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