In the commodities super-cycle that has engulfed global financial markets for the past two years, most investors focused on oil, copper or zinc. But the stunning performance of fertilizer producer Potash Corp. shows agricultural commodities are also experiencing a boom market. Over the past year, the company's share price has increased 107% — making it our best-performing large cap.
Potash Corp. is the world's largest publicly traded potash producer by capacity. While the company has certainly benefited from the increase in fertilizer prices over the past year, a strategy of solid acquisition and matching production with sales helped the company outperform competitors such as Calgary-based Agrium Inc. (TSX: AGU), which ranks No. 22 on our list of best-performing mid-cap stocks.
Despite the strong growth so far this year, there may be even more upside for investors. The company recently announced a 3:1 stock split, a doubling of its dividend and a US$775-million expansion project. Potash will also benefit from the growth of new biofuels. Earlier this year, Potash was one of 74 companies listed by New York?based Citigroup Global Markets Inc. as “well positioned” to benefit from green investing and climate change.
That green investing potential is one of the reasons Edwin Chee, an analyst at Toronto-based BMO Capital Markets, rates Potash as one of BMO's Top 15 Large Cap Stocks, Top 15 Growth Stocks. “In an environment of low grain stocks worldwide and continued strong demand that is being bolstered by the advent of biofuels and ethanol in the U.S.,” wrote Chee in a recent research note, “it is more probable that grain prices and fertilizer demand will remain strong for an extended period of time.”