Charles Payne: Investing in Agriculture

By on April 26, 2012

Charles Payne - Fox Business NewsFox Business New’s Charles Payne laid out the bullish case for agriculture stocks. Payne specifically recommended Mosaic (MOS), producer of phosphate and potash based fertilizer.

According to Payne, Mosaic gave an update on their guidance and things are looking much better at the top end of their range. They had a strong early spring season in America and around the world.

Payne pointed out the stock, along with the entire space, has been beaten down pretty badly. However, there’s a net 70 million more people on the planet each year, according to Payne.

Payne claimed MOS is a global story, as well as about people getting richer and wanting more food. Payne pointed out that a billion people are undernourished. Payne stated, “it’s about people prospering and demanding more from their food supply.”

Payne stated that right now Mosaic doesn’t have a lot of pricing power. Payne added that when these stocks take off they move quickly and Mosaic is trading at less than two times book value and two times sales.

Payne said people around the world want what Americans have and they are starving both literally and figuratively.

Payne mentioned its tough picking up a falling knife, but management has come out with positive comments and he likes the risk/reward of this investment.

When asked about other players in the industry, Payne mentioned Potash (POT-WI) and Agrium (AGU). He predicted there would be consolidation in the space.

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