FMC Corp.: Jim Cramer's Hidden Agriculture Trade (FMC)
On tonight’s MAD MONEY on CNBC, Jim Cramer wanted to review a hidden undervalued stock in the market. Tonight he noted FMC Corp (NYSE: FMC) as a key undervalued stock in chemicals and agriculture. While he likes the company on its own, he noted that the current inflated prices in Agriculture and potash stocks should actually generate a much higher stock price. He thinks that because of this company’s pricing power in its its niche that this should be worth a combined $5.7 Billion instead of $4+ Billion today. In his words, that yields a $70 STOCK.
By now you have seen this sector on fire. We just noted a hot potash IPO coming soon and just yesterday we noted how the best post-IPO in recent months is also in the sector. Deere (NYSE: DE) shares indicated lower after earnings this morning and closed lower too.
Just remember one key thing. Thursday is Valentine’s Day, and fertilizer is only a good gift if your intimate other is a green thumb that hasn’t been able to get to the store in a very long time.
FMC closed up 2.2% at $53.54 today and the 52-week trading range is $35.64 to $59.00. $70.00 would be a considerable price. While it still is listed as having a 30+ P/E ratio, this really trades with a 13.8 P/E ratio for fiscal Dec-2008 forward estimates.
Jon C. Ogg
February 13, 2008