Monday, September 15, 2014

Martin Armstrong-Next Decline Will Be Far Worse Than Last One

Please share this article

Yara International ASA (YARIY): A Dirt-Cheap Global Fertilizer Producer

According to the United Nations, the world needs to produce 60% more food by 2050 to avoid mass unrest.
At that point, the global population is expected to reach a whopping nine billion people. More mouths to feed, combined with the higher caloric intake of increasingly wealthy societies, will dramatically increase food demand.
Yet, as I wrote last week, the investing herd has stampeded out of agribusinesses.
The Market Vectors Agribusiness ETF (MOO), which was a crowd favorite in 2011, has experienced significant outflows totaling $2.8 billion year to date.
This ETF holds phosphate and potash producers such as Mosaic (MOS) and Potash Corp. of Saskatchewan (POT), in addition to farming machinery manufacturers such as Deere & Co. (DE) and Kubota Corp. (KUBTY).
I’ve scoured the full list of holdings for hidden value, and there was one company in particular that caught my eye…

Scandinavian Value

That company is Norway-based Yara International ASA (YARIY), the world’s largest producer of ammonia, nitrate, and complex fertilizer. Yara has sales in more than 150 countries and helps crop producers provide food for a growing global population.
With low debt levels and the equivalent of $1 billion in cash, Yara’s balance sheet is pristine. That, combined with strong earnings, translates to a very low enterprise value-to-EBITDA ratio of 7.8x. Yara also has an attractive price-to-sales (P/S) ratio of 1.0x.
By comparison, Syngenta AG (SYT), the company with the largest weighting in MOO, has an EV/EBITDA ratio of 13.0x and a P/S ratio of 2.2x. These metrics should give you an idea of the tremendous opportunity that Yara shares represent.
Yara also produces ample free cash flow (FCF) to cover its dividend payments. In the latest 12-month period, the firm generated nearly $2 billion in FCF with a respectable FCF margin (FCF as a percent of sales) of 8.8%.
Yara’s valuation is all the more surprising because the company is well-positioned for growth. In Latin America, its crop nutrition solutions are helping improve crop yields and quality. For instance, Brazil – which has become an agricultural powerhouse – is Yara’s biggest market.
Yara’s primary share class trades on the Oslo Stock Exchange with a market capitalization of $13.6 billion (85.8 billion NOK). Additionally, there are American depositary receipts (ADRs) trading under the ticker YARIY that give U.S. investors an easy way to invest.
Now, foreign withholding taxes on dividend payments are an additional factor to consider with ADRs. Luckily, it’s not a huge concern with Yara. Net of taxes, YARIY still has a solid dividend yield of 2.5% (based on 2014’s annual distribution).
Please share this article

Macy’s, Inc. (NYSE: M)

Macy’s, Inc., together with its subsidiaries, operates stores and Internet Websites in the United States. Its stores and Websites sell a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. The company also operates Bloomingdale’s Outlet stores that offer a range of apparel and accessories, including women’s ready-to-wear, fashion accessories, jewelry, handbags, and intimate apparel, as well as men’s, children’s, and women’s shoes. As of February 2014, it operated approximately 840 stores under the Macy’s and Bloomingdale’s names in 45 states of the United States, the District of Columbia, Guam, and Puerto Rico, as well as the and Websites; and 13 Bloomingdale’s Outlet stores.
Take a look at the 1-year chart of Macy’s (NYSE: M) below with added notations:
1-year chart of Macy's (NYSE: M)
M had been trending mostly sideways from February until mid-August. The stock had also created a relatively clear level of resistance at that $60 (blue) during that period of time, and that level was also a 52-week high resistance. The break through that resistance led to a run up to $63. Pullbacks to $60 should provide support, while a break below $60 could signal the end of the run.

The Tale of the Tape: M broke out to a new 52-week high. A long trade could be made near $60 with a stop placed below that level. A break back below $60 would negate the forecast for a continued move higher.

Please share this article

ReneSola (NYSE: SOL): Under $5 Stock Could Soar 30% in the Next 8 Weeks

Earlier this month, China's National Energy Administration issued an updated policy concerning distributed generation of solar power. Basically, the changes were meant to encourage local governments to promote the increase of solar installations on the rooftops of private homes and businesses. Buyers understandably flocked to solar power stocks.

ReneSola (NYSE: SOL), a Chinese manufacturer of solar wafers and modules, was a big beneficiary of renewed investor interest. The small cap soared on the news and was up more than 20% in three days before backing down a bit. But don't let that percentage scare you, as the stock trades at very low prices. What is more important is that it scored a technical breakout that suggests there is a lot more upside ahead.

Before continuing, I want to emphasize that a stock with a low dollar price is not necessarily cheap. If the prevailing trend is down then low prices can get even lower. What is critical is that the stock show signs of strength in the form of investor demand, upside momentum or a surge in volume and/or volatility. Preferably, it will have all of these, but perfect setups are not the reality most of the time.  (more)

Please share this article

US Weekly Economic Calendar

time (et) report period Actual CONSENSUS
8:30 am Empire state index Sept.   16.0 14.7
9:15 am Industrial production Aug.   0.3% 0.4%
9:15 am Capacity utilization Aug.   79.2% 79.2%
8:30 am Producer price index Aug.   0.0% 0.1%
8:30 am Consumer price index Aug.   0.0% 0.1%
8:30 am Core CPI Aug.   0.2% 0.1%
8:30 am Current account Q2   -- -$111 bln
10 am Home builders' index Sept.   57 55
2 pm FOMC statement        
2:30 pm Yellen press conference        
8:30 am Weekly jobless claims Sept. 13
306,000 315,000
8:30 am Housing starts Aug.   1.03 mln 1.09 mln
10 am Philly Fed Sept.   24.0 29.3
12 noon Financial accounts Q2      
10 am Leading indicators Aug.   -- 0.9%
Please share this article