Lesser-Known Stocks to Play on Rejected Potash Takeover Bid by BHP Billiton
Excerpt:
Stonegate trades on its own, but I think the way to play it is by buying Sprott. They are in the process of developing what appears will be largest phosphate mine in the world, in Peru, when it gets brought online in next one to two years. The main fertilizers in ag are nitrogen-based, potash-based, and phosphate-based. All of them are absolutely critical for high yields. The upside in a Stonegate would be quite substantial compared to a Potash. Stonegate has a market capitalization of $130 million; right now, it’s dramatically underpriced. With the valuations given to other companies like Potash, and given that Stonegate has a top-end phosphate mine, it wouldn’t be unthinkable that a few years from now, Stonegate could be worth a billion dollars. Like I said, the smart money will buy Stonegate through Sprott because, that way, you not only get Stonegate, you get all the extra good stuff Sprott has going -- oil, metals, and perhaps best of all, deals they set up two years ago with Indian nations in Canada to develop 250,000 acres of farmland, which is another fantastic asset that’s going to continue to do well -- and not a lot of companies have this sort of unique relationship in a stable country like that. Now, Stonegate could get bid up a bit today, but it’s really a fantastic investment at this point. Things like the Potash big tend to have more of a spillover in the larger stocks, and somewhat of a delayed reaction in the smaller names.
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