Investment In Potash Corp./Saskatchewan (USA) (NYSE:POT) Is Still Viable

Denver, CO, 10/28/2013 (Avauncer.com) – The Canadian potash manufacturing company has in recent times been facing a lot of hard financial times. In its third quarter earnings, Potash Corp./Saskatchewan (USA) (NYSE:POT) reported a 30% decline in earnings. Two thirds of the 30% decline was attributed to the drop in potash sales. In the worst of situations, the company’s shares hit a low at the beginning of August but in a recent close the company stood at a comfortable $31.06 per share. In the last three months the company has gone down 17% while in the last 12 months it has gone down by 23.1%. Despite the steep decline the company has not once gone below the $20 mark in the last five years.

However most of the company’s woes are attributed to the looming price war that was announced by Uralkali (OTC: URALL) a major potash producer from Russia. Given that this is the nature of the commodity market and that the market will soon correct and balance the situation, it is advisable to investors that in the long-term strongly consider investing in Potash Corp.

To start with Potash is expected to benefit indirectly from a 3 year contract between one of its strategic investments in China called Sinofert. The company also has a very strong balance sheet that does not contain too much debt or equity leverage and has enough money to conduct its business. This is one of the things that any long term investor should look out for in a company.  The company also generates significant cash, offers considerable dividends, above all trades close to its book value and has a dividend yield of around 4.35% currently.

In the next few years the company is also expected to see a considerable drop in capital spending sighting the conclusion of its expansion project. This will mean that the company will have more cash to use for dividends and other shareholder friendly endeavors.

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