Feb 13, 2013|
Stock Talk - Dan Rohr, Morningstar
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
It is time for -- talk and we are joined by Dan roar from Morningstar Dan good morning welcome to the -- Good morning Mary -- threaten me. Am looking at this first stock in of -- myself what's wrong with this thing in the priced earnings ratios five to one their Macon tons of money. It's only seventeen bucks a share cloud peak energy. Yeah cloud peak well I'll take a coal miner and for your listeners that I at all. All they need to know on why it looks so cheap right now most called names are are pretty and love to you know you know the story really is a natural gas prices of property utilities to switch away from -- Put pressure on coal prices. Now some of that market share -- loss is gonna stay lost but we think a good deal gonna come back -- natural gas prices to retire prompting utilities to switch back. I don't why would you like this one say over -- different coal company. Yes that's so critically the whole it's gonna come back first when utilities begin to switch back is gonna be powder river basin coal. The cheapest stuff to mine on the planet and that is exclusively -- cloud peak operates so it's it's a lower risk played in say an Alpha Natural Resources are. Arch Coal to operate in the comparably high cost dust and draw -- in the region. And trying to -- so you like you do little what do you think it might go to new. In the next couple years. We think the fair value is 28 bucks a share vs he said the seventeen it's straight net today. While that's -- a game that's quite -- -- let's take a look at this next what I actually have two cousins at work for this company it's called. Potash corporation of Cisco actually the symbol DOT. In June when you work for this company you're literally a mile under the ground home it's not just of potash mining can -- ever been to one of their minds said Dan. -- now bent to one of their mind I was up just north of one of their mind and uranium mine in Saskatchewan to win. Not too long ago that mine called cigar lake -- underneath a late to. Dan you're supposed to go there in the summer and it -- -- that he did you get the memo you've picked and lets you play hockey you don't go in the winter -- different. You know ideally you got out of -- for you on a map where he would doesn't well I think I don't -- -- day at the beach either how cold was forty below. Who you know it it was a little bit warmer then the the last trip I had to go on which was up north of the Arctic Circle and Finland. Right in December but I got to tell my daughter that I. And the reindeer. I'll tell us why you like potash. Symbol again POT 42 bucks a share. Yes -- the the world largest producer of potash fertilizer and we liked the name for three main reasons more and potash industry is really call -- -- six producers crawl the controlling about an 80% production capacity so that's gonna mean strong pricing power to. We think potash demand -- continue to grow in the long run as farmers look to increase yields. -- growing population especially in the developing world where rising incomes mean customers can afford more meat. Three the company controls some of the lowest cost potash assets in the business which. Mitigate. The downside risk in an -- minute and then one more I think -- cousins work there right yeah that's you know that's -- -- kicker. Gets right that's right and the they spend their days literally. A mile underground are right let's take a look at your last pick Compass Minerals International Ciampi what can you tell me. Yes that this that this is an incredibly boring business there main activity is taking salt out of the ground and selling it to the states and municipalities that spread it on streets and highways. Now critically they'd do it at a lower cost than anyone on the planet in we've seen shares spare rather poorly over the past couple years mostly because of two years -- -- very light -- all. As we saw last week that isn't a permanent phenomenon. And we expect better -- sales to states and municipalities in the years to come better earnings and at a higher share price as a result. Interstate there and now this you buy this for seventy forwarding is really -- We think it's the intrinsic value is right around ninety bucks a share. Ninety's well okay well three good picks for me -- sure appreciate it Dan thank you. Dan roar Morningstar they give you those picks again cloud peak the symbol CLG. Potash Corp. symbol he OT. Compass Minerals symbol CMP the last two potash corporate Compass Minerals. Do in fact paid a dividend is not a robust dividend that they are both dividend. Paying stocks. All right very good there and like that. So what's hot ash -- My wife and I did the tour together years -- between your score get like a Ben and Jerry store my Michael worked there at the time so different and today you could do a tour of the mine it was fascinating and he takes this elevator and -- just going down or an ever do it ever and -- you're literally a mile underground didn't yet have some sort of a panic attack and needed an oxygen mask or something. No you you had doubt that we were merit wearing mask is that the -- done and why would anybody wanna go take a mine to war whose interest are really into like what what they show you besides dark should see the mining equipment demining equipment. Imagine. The -- that the drill. Was three bits and each bit was the size of the room were -- it might. So it was three times sizes and then it would just drove through the grounds pull out the potash and potash is what they make fertilizer from that's why these companies are doing so well because. The everybody whether it's China Russia Australia United States they need potash in order to increase the productivity from their crops say so you gotta feed of a growing population so potash. Is very -- basically he called -- an all monopoly. See at least trying to say is they've they've got a monopoly on the price do they charge whatever they want the Chinese would buy. All of it if that's Digisette yet that's -- six on seven says. So was this kind of romantic date you to your -- fun I'm a mining -- -- in Canada at this is what you got it right he had. There was this Valentine's day of like. I think it was does that at NASA so we roll right now and Canadians have a little toast. But does champagne toast -- -- -- like made a romantic event that no we did that in between the second and there appeared to tell you know your culture and I don't I don't know why anybody would like them it was a Oscar I can't handle it she elected to this fun. They will be back more on the financial exchange.