Instead of marveling at my trading genius, I began thinking back about the similarity of Potash Corp's parabolic price appreciation and that of several semiconductor stocks I frequently traded back in 1999 to 2000. Nostalgia faded quickly as I shifted into semi-panic mode because those who were active traders in those days certainly remember the sell off in the semiconductor stock index and the greater NASDAQ market in general.

Not being one to ignore instincts, I was prompted to open up my trading program again to review the similarities from a technical point of view. Reason being, I use technical analysis to identify entry and exit points for the stocks I trade. Check it out for yourself.

Within seconds, you can obviously see the similarities between Potash and Applied Micro Circuits Corp (NASD: AMCC).

Next morning, no joke, I flip on the TV this morning and find out that God's top man, the Pope himself, is showing up to see good ol' George W. Bush at Andrews Air Force Base. A sign from above?

Maybe, but I'm not a big believer in guy who supposedly has a free pass to heaven, but for some reason, has to ride in a car fitted with a 12” of bullet proof glass. What brings the Pope to visit Washington DC after a 29 year absence? Jury is still out, but I do have an idea. 

My reasoning to this suspicious visit could be, at least in some small part, due to the foreseeable spike in global food prices that any 1st year economics student could have spotted.  I'm not saying the Pope's visit is a "mission of mercy" to help those less fortunate, but I'm assuming that's still listed somewhere in his job requirement and I'm fairly certain it will come up in conversation. 

But thanks to the geniuses in Washington DC, the USA has decided to take a poorly managed energy addicted nation and turn it into a dim witted, poorly managed energy addicted nation by taking our food supply - yes I said food supply - and making it into ethanol to run our 10 mile per gallon SUVs so that Mrs. Cleaver can take Wally and The Beaver to soccer practice.

In the meantime, people in Haiti and Egypt are rioting over food they can barely afford, or in some cases, can't afford at all. I wonder what would happen in the US if the price of bread or rice spiked above our ability to absorb the excessive prices. The politicians would likely be throwing off their $4000 suits and donning a John Deere hat with a corn farmer's overalls as quickly as possible while joining in the anti-establishment melee.

I digress... or do I?

This is one of the difficulties in being a successful investor/trader while also being a card carrying member of the working class. I know that there are people less fortunate, but my job and that of the colleagues I advise, is to find stocks that are making money. So my diatribe is actually a supporting call for Potash Corp, but also a notification that current events will become more frequent, and quite possibly, even more serious.

Couple reasons why:

• Global demand for food is at an all time high. For example, Brazil is chopping down more rain forest every week to boost available farm land, and people are literally rioting in the streets.

• The global spot price has rapidly increased in the last 12 months. Proof you ask? India recently signed a trade agreement with Russian potash suppliers for $625/ton versus the price 12 months ago at $270/ton.  That is a 130% increase in 1 year alone.  Not surpringly, India has simultaneously set about buiding a potash mining operation in Ethiopia to combat the rising prices.  Therefore, India and other nations realize the demand is real and taking adequate steps to ensure they have enough fertilizer to produce their crops.

• Potash Corp. has a near monopoly on the Earth's potash supply. Several other companies like Uralkali (Russia) and Belaruskali (Belarus) maintain a significant proportion, but Potash Corp is the worlds largest potash supplier. The stats don't stop there, as Potash Corp. is the worlds 2^nd largest producer of nitrogen and 3^rd largest supplier of phosphates. All of which are used as fertilizer or fertilizer components.

So one could argue, that Potash Corp has precisely positioned itself to do no wrong for the foreseeable future. Considering that a global food shortage has already boosted food prices, and nations are clamoring to enhance their ability to grow their own crops at an alarming rate. In addition, adding further difficulties such as the world's breadbasket (i.e. The American Great Plains) is now growing food for ethanol production, and those the nice juicy T-bone steaks or thick cut pork chops we love to eat every day requires approximately 10 times the amount of grain to grow to an age suitable for “processing”.

So adding all these variables together, Potash Corp couldn't be in a better spot - sitting on top of the world so to speak!

Having come to this conclusion, and having the foresight to say that human race never lose it's desire to eat, my fears of owning an overvalued stock have subsided.  Therefore, I'm impatiently waiting for Potash Corp to blow away earnings on April 24, 2008. If they do half as well as The Mosaic Company (NYSE: MOS), another high flying fertilizer company that reported earnings 10 fold higher than expected, Potash Corp. should do very well indeed.

Many analysts also agree with me by raising expectations and boosting price targets to a range of $195 to $260 per share. Quite a significant price range between those values, however, four analysts have upped their EPS estimates in the last month, and one has done so in the past 7 days.

Growth investors, and especially momentum investors, look for these impressive indicators as a beginning or continuation of a trend.  In Potash Corp's case, this trend will certainly continue for many months (or years) to come.

Any questions / concerns / comments are much appreciated!

Disclosure: Author owns Potash Corp. shares at the time of publishing.