T.WPX, and V.PPI are a Vancouver analysts top picks in the potash industry, a sector that he believes will benefit from rising demand and stronger pricing.
Siddharth Rajeev, head of research with Fundamental Research Corp.
Focus: Independent equity research with focus on mining
Can you give us your perspective on what is happening in commodities markets right now?
“We are most bullish on potash. This is because the world needs more potash to feed and improve the diet of a growing global population at a time when the amount of farmland is not increasing. As a result, farmers are going to have to be more efficient to meet the demand for food.’’
Do you have a target price for potash?
“We have no price target. But we believe that the direction is higher over the next five years. Canada has a dominant position in the market. Future demand for this commodity will be driven by India and Asia, countries that are looking for a long term source of supply.
Which companies are you following in the potash space?
“One of my favourites is Western Potash Corp. (TSX: T.WPX, Stock Forum). It hosts one of the most advanced stage projects in Saskatchewan that has yet to be acquired.’’ Trading at $1.01 this week, Western Potash has a market cap of $162.9 million, based on 161.3 million shares outstanding. The 52-week range is $1.60 and 70 cents. The company is working towards completing a feasibility study at its Milestone potash project.
Rajeev also likes Passport Potash Inc. (TSX: V.PPI, Stock Forum), which recently announced an initial NI 43-101-compliant resource estimate for its Holbrook Basin potash property in Northern Arizona. This is because the estimate takes into account only 40% of Passport’s land package, leaving room for growth. As Holbrook is a relatively shallow resource, Rajeev believes Passport will benefit from lower costs when compared to its counterparts in Saskatchewan.
Trading at 24.5 cents this week, Passport Potash has a market cap of $41.5 million, based on 169.3 million shares outstanding. The 52-week range for the stock is 80 cents and 16.5 cents.
Ask the Expert, Holbrook Basin, Saskatchewan, potash, farmland, China, India, commodity, future demand, feasibility study, potash project, shares outstanding.