TNH Update
Terra Nitrogen is the smallest agricultural company , but it shows the most interesting short-term opportunity. The stock rallied up to 140 in July and pulled back. It returned to this level in December and broke out two weeks later, completing a cup-and-handle pattern.
The rally spike hit 159 a few days later, with price then pulling back sharply. That decline undercut the breakout level for three sessions. The stock jumped higher on Friday and ran up to a new high on Monday. This sets up an excellent trade entry when price pulls back to fill the 147 to 150 gap.
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Will hold this stock into SLO Round 2.
ASTRA portfolio::
TNH
Portion of fund: 8.15%
Inception return: 36.48 % (Since July31, 2007)
Comments: View Comments | Wednesday January 16, 2008
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Archive Comments (1)
Update...continued
Stock market bulls did not have much to cheer about on Thursday so the agribusiness sector and stocks, TNH included. Reports are saying that the Market Vectors Global Agribusiness exchange-traded fund (which sports the way-too-cute ticker MOO) is down 6% in early trading. The ETF includes seed maker Monsanto, Mosaic, which makes fertilizer, and Deere, the tractor behemoth.
Such stocks had been on a remarkable tear -- the MOO ETF had gained nearly 50% through Jan. 14, when it reached its record high, since it was launched just over four months ago. The primary catalyst for the sector has been rising demand for the gasoline substitute ethanol, which sparked a boom in corn plantings, and prices, last year. That spurred more purchases of everything farm-related from potash to plows, or for some the sector is interesting, but with P/E's > 35 far overpriced, but future growth will be slow. I guess some overreaction is built in as well, and the picture could easily looks other way around sooner or later. Is there fertilizer supply shortage? Is Supply/demand a key factor?. For example,expectations for 2008 plantings,coupled with low fertilizer inventories, have encouraged many customers to lock in assured supplies for the fourth quarter of 2007 and the spring planting season in 2008.
Albeit TNH is somewhat overweighted in my ASTRA portfolio I continue to hold.
Armin
Posted by astuk January 18, 2008 6:21 AM