Potash Corporation of Saskatchewan Inc. not a buy

Jun 19th, 2015 – Comment

At this juncture there is no evidence to suggest that investors can anticipate a new leg up in the near term.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Today I will conclude the assignment from Dimitrios who had asked for my opinion on Toronto Dominion Bank (TD TSX) and Potash Corporation of Saskatchewan Inc. (POT TSX). The analysis of TD was concluded on Wednesday June 17, 2015. Today for the fourth time since 2012 I will examine the case for POT .

The last occasion was on January 24, 2014 when the shares were trading for $36.55. Jim had bought his shares for $29.98 and he wanted a second opinion on if it was the right time to sell. The dominate feature on the three-year chart was a long term downtrend that was still in play. However the stock had caught a bounce off the panic lows of 2013 and had moved higher until an overbought situation led to a pullback. POT was retesting support along the 200-day moving average and the MACD and the RSI were indicating that investors could anticipate further selling pressure.  Retrospectively that was the right call. POT retreated to $32.00 where it caught a bounce to near $40.00 by June of 2014.

 

Another inspection of the patterns on the charts will inform my thoughts on this investment.

 

POT

The three-year chart highlights the retreat from the 52-week high of $47.10 that started in late February of 2015. The MACD and the RSI generated sell signals ahead of the move lower as POT became overbought. The decline has seen the stock breach support along the 50 and the 200-day moving averages and by early June a death cross surfaced. The downtrend that has been in place since late February will require monitoring for signs of a reversal. At this juncture there is no evidence to suggest that investors can anticipate a new leg up in the near term.

 

 

 

 

 

 

POT2

The six-month chart provides a close up of the top in February which was preceded by the MACD and the RSI generating sell signals earlier in the month. The attempt to move higher in May was held back as POT hit resistance at $41.00. The dividend yield on the shares is 4.92% which is attractive but not a sufficient reason to motivate a buy at this time. Put this one your watch list for a better entry point.

Next time I will probe the charts for Badger Daylighting Ltd. (BAD TSX)  for Bill.

 

Make it a profitable day and happy capitalism!

 

Categories: Agriculture
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