OrcChieftain

Fertilizer Companies Are Going To Profit

NYSE:SMG   Scotts Miracle-Gro Company (The)
The energy crisis in Europe and other parts of the world is a sure thing. Prices are going up, salaries are left far behind. Of course, inflation isn't limited to energies (and related products), but as part of the diversification process, I opted for at least one fertilizer company.

The thing is that a lot of energy is consumed in a process of creating conventional fertilizers. An initial shock will likely shake the industry a bit, but those who persevere will set higher prices. And if an absolute price value is higher, it will be easier to sneak in higher margins.

Fertilizers are a must. As the prices roam through different assets, from basic resources they will continue to final products over time. But one thing politicians can't afford is for food to get expensive. You can literally measure how much the revolution is worth in the food prices. If a majority of the people have to spend over 40% of their income, chances for revolution grow drastically based on the historical record.

While I am still looking for good Magnesium miners that my broker has available, I will be looking to get SMT at a discount . The price has grown a little on the dividends increase announced last week, but as it is always, it might have overshot.

Yet to validate, the below chart shows the price behavior in the previous two years. Seems like there tends to be a little downswing in March from which, there is sustained growth. I will be looking into the seasonality later again but if this is correct, I wouldn't be scared to buy now and hold at least until late winter as, throughout this period, there was continuous growth both of the times (yellow background highlights December each year).


Furthermore, the price is just above 200 EMA (black line). From a technical perspective, breaching this level should signify bullish continuation.

One more good thing - the other fertilizer companies are making all-time highs along with the markets. SMT is left behind big-way which means it has much more room for growth shall opportunity arise.

So why am I waiting for the discount? Friday has closed above 200 EMA but is not all too convincing. It got there only narrowly at the end of the day and for how little it moved, there was just too much volume . I suspect some people are getting rid of their shares and will push the price lower for a few moments before it resumes its original direction.

A preliminary entry is around 50 EMA (red).
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