Awhile ago I started a swing trade with Potash Corporation of Saskatchewan. I used $600 to purchase about $2,000 worth of POT shares using leverage. Unfortunately some time after my purchase, Russia’s Uralkali got out of the potash cartel which sent the price of potash lower, which of course meant all potash producers around the world had their profits squeezed. Potash is an alkaline potassium compound used in fertilizer.
When I initially bought 45 shares, POT was trading at $43.74 CAD per share. It dropped down to about $30 per share when Uralkali pulled out. But today POT has recovered a bit and is trading at about $37. Instead of selling and taking my losses, I’ve decided to double down on it 🙂 So earlier today I bought another 45 shares at $36.90 each, doubling my total holding to 90 shares, wow 😯
I should have pulled the trigger earlier but I’m just glad I got in today before the price can get any higher 🙂 Thanks to my new trade I’ve averaged down my ACB from the initial $43.74/share to $40.32/share 😀
I got the idea to increase my position in POT after reading PC’s post about Potash Corp’s recent performance. It’s risky to invest a second time into a company that is worth less than before. There’s a very real possibility for the price to continue falling and I could lose my new money as well my previous investment (o_o) But risky is my middle name and I like to go big or go home 😛
With a P/E ratio of 15.2x I feel POT is currently at reasonable valuations. It’s also a low cost producer of nitrogen, phosphate, and other chemicals needed for industrial use. Farmers will always need fertilizer as long as there are people in the world, and I think POT is in a great position to capitalize on that market. Also, the 4.09% dividend yield is a nice bonus 🙂
Random useless fact: If you find a lost driver’s license, you can drop it in any mailbox and the Postal Service will deliver it back to the owner.