The soon to price IPO of Intrepid Potash (NYSE: IPI) is a hot upcoming IPO that we have covered as "hot to scorcher" because of the steady rising and hikes seen in potash and fertilizer prices. We covered how the company raised its share offering and raised its total share offering. Tonight the now would-be "scorcher" just got the pre-IPO bump from Jim Cramer on CNBC’s MAD MONEY tonight that will probably create even more interest tomorrow.
While we don’t like seeing IPO’s getting "made even hotter" before they price, he did at least make some caveats on this hot agriculture and potash sector. He said he has parameters and you should not pay more than $34.00 per share in the after-market for this IPO. He thinks it should go much higher than that but you can’t just chase up indefinitely. He also said he isn’t exactly happy about the "use of proceeds" that the company is using essentially buying out its parent and then paying down debt with about 10% of the proceeds.
He thinks that Intrepid Potash could earn $1.24 EPS in 2009, and thinks it deserves a 55% premium to the 17-times 2009 at Potash Corp. of Saskatchewan (NYSE: POT) because of its pure-play and because of its proximity to where the mines are located as opposed to Canadians. That was how he came up with the $34.00 level. Cramer also noted The Mosaic Company (NYSE: MOS) in this sector.
Jon C. Ogg
April 21, 2008
Jon Ogg is a producer of and editor for both the Special Situations newsletter and the "10 Stocks Under $10" weekly newsletter for 247WallSt.com; he can be reached at email@example.com and he does not own securities in the companies he covers.