Can Intrepid Potash (IPI) follow in the footsteps of Potash Corp. Saskatch, Inc. (POT)?

If you don’t know by now, POT is up 552% over the past two years, 230% over the past 12 months and 43% year to date; all while the S&P 500 is down 2.25% year-to-date, an amazing accomplishment in this market environment (see chart below).

Intrepid Potash Inc, a producer of crop nutrients, raised $960 million with an initial public offering that priced shares above expectations in the $27 to $29 range. The IPO price came in at $32, $3 above the top of the range expected by underwriters. The original estimate was for 24 million shares to be priced between $24 and $26 per share (30 million shares were offered at $32).

Intrepid Mining, the parent company of Intrepid Potash claims to be the largest potash producer in the U.S. I missed the HUGE up-trend in POT but IPI may give this industry one last run before the trend is over. Markets are not efficient so the greed of crowds may take this IPO higher due to the recent performance of POT. Risks will be associated as a quick sell-off could be a huge possibility if things don’t go the way investors expect.

As you can see from the charts, IPI priced at $32 per share but jumped as much as 50% during the trading debut. The stock reached a high of $53.50 today but closed down 2.6% at $49.09.

Tate from Self Investors notes:

“As far as the fundamentals, they look solid but nothing extraordinary. My take on this is that this IPO comes at a time when the agriculture stocks appear to be near a major top with perhaps one more last climax run left in them. Does this IPO signal the top? Just maybe. Like all IPO’s I’ll let it trade for at least two weeks and only enter on a breakout from a bullish pattern.”

I tend to agree with his analysis for the most part. I will not hesitate to jump on a trend if IPI starts to run higher because crowds are persistent and I don’t like to fight them.

Stock of the Day
Titan Machinery Inc. (TITN)
Friday’s Closing Price: TITN – $23.97

Sector: Retail
Industry: Retail/ Wholesale Building Products
52-week Price: $9.18 – $24.09

February 25, 2008: TITN – $19.70

Three stocks are catching my eye while making multiple screens over the past couple of weeks. MTL is up over 13% in less than two weeks since I highlighted it in a post titled Basic Materials (Oil) Stocks Making New Highs

Trading momentum is paying-off in the current market environment. Swing trading breakouts making new highs on volume at least 100% larger than the average is king. It’s working so pay attention and be smart while putting on trades. MTL is no longer a buy since it has become extended but TITN and RIO may be setting up for new 52-week highs.

April 14, 2008: TITN – $22.39

TITN – 22.39, solid young stock with an ideal entry point near $20 (looking good)

Fourth quarter earnings are scheduled for Monday, April 28, 2008. I would not be a buyer until after earnings are released (this event will shape my view on the stock and a potential position). Last quarter’s net income rose to $2.7 million, or 36 cents a share, from $0.8 million, or 13 cents a share, a year ago (sales increased 67% to $132 million).

My ideal accumulation area is between $19 and $22 with the best entry coming along the 50-day moving average, which seems to be providing support. The weekly chart is showing clear accumulation by institutional investors as most up-weeks are happening on larger volume while down-weeks are happening on lighter volume.

I will definitely be interested in a position since this stock has been making my nightly screens and scans since February. I have learned that the best stocks are the ones that continually make these scans (that is fact since I started investing with this method in 2001).

Potential Trade Set-up:
Entry: $21.00
Risk is set at 1.0% of total portfolio or $1,000 of $100k
Stop Loss is 10% or $18.90
Number of Shares: 476
Position Size is $10,000
Risk is $2.10
Target is unknown (too little information)

Institutional Analysis:
Held By Institutions: 42.75%
Total Held by Institutions: 62
Money Market: 43
Mutual Fund: 18
Other: 1

New Positions: 60
Positions Sold: 0
Shares Held: 7.43M
Shares Held Previous Period: 0.13M

Shares Bought: 7.3M
Shares Sold: 0
Value of Shares Bought: $134.1M
Value of Shares Sold: $0

Top Institutional holders; Shares Held:
Systematic Financial Management, L.P.; 711,600
Trafelet Capital Management L.P.; 528,500
Heartland Value Fund; 350,000
Heartland Advisors Inc.; 350,000
Wasatch Advisors Inc.; 325,000

Key Fundamental Numbers:
Market Cap.: $320.3M
Outstanding Shares: 13.4M
Float: 6.0M
P/E (TTM): 46.02x
PEG Ratio: 2.09x
EPS Growth (MRQ): 229.23%
Revenue Growth (MRQ): 66.99%
3-Yr Earnings Rate: 54%
3-Yr Sales Rate: 34%

[Read more…]

Visa Inc. (V) is set to launch the largest initial public offering in U.S. history on Wednesday but I doubt it will do much to help this market (from a bullish standpoint). The company is offering 406 million shares with an anticipated price between $37 and $42, according to SEC filings.

In total, the IPO could raise nearly $17 billion, surpassing the record held by the AT&T Wireless IPO from 2000 which raised $10.6 billion. The $15 to $17 billion projection is approximately 70% higher than what the market was reporting when I was anticipating this IPO last November.

“VISA, the largest U.S. credit card network said it is looking to raise $1o billion in an initial public offering, according to a registration statement with the SEC.”

JPMorgan (JPM) is one of the lead underwriters (Goldman Sachs is the other) so the market wants this IPO to launch successfully so additional fears don’t rise following the $2 Bear Stearns fire sale. A successful IPO would generate a large cash influx to banks such as JPMorgan, Bank of America and Citigroup. Visa’s IPO could generate around $500 million in fees for underwriters, according to documents with the SEC.

Shares will price after the close Tuesday with lots ready to move Wednesday morning.

As pointed out in my last post, Visa and Mastercard (MA) are not directly exposed to rising defaults and late-paying consumers because they process transactions and these transactions typically rise when credit is tight from banks. American Express and Discover are not as fortunate in this sense as they extend the credit to their card holders, exposing themselves to the defaults.

As you can see, Mastercard (MA) has held up very well during this credit crisis. It has not violated it’s major moving averages and is still in an overall long term up-trend.

November 15, 2007: Anticipating the VISA IPO

Why do I like VISA’s potential?

• $1o Billion would represent the second largest IPO ever!
• Revenues are expected to grow steadily as consumers continue to use their cards
• VISA processed 44 billion transactions totaling $3.2 trillion in 2006 (Mastercard processed 23.4 billion transactions totaling $1.9 trillion)
• VISA has made $771 million on $3.7 billion in revenue during the first nine months of 2007
• VISA makes their money from the fees it charges to card users and merchants using its network
• Mastercard is half the size of VISA and is up 5-fold from its IPO

BEST OF ALL:

• Because it acts as an intermediary, Visa doesn’t sustain losses when consumers don’t repay the debts run up on credit cards bearing its brand. Those liabilities instead fall to the banks that issue the cards and set the terms of repayment
• Most of Visa’s major stockholders are banks. They include: J.P. Morgan Chase & Co., which owns 23.3 percent of the company’s Class B Stock; Bank of America Corp., 11.5 percent; National City Corp., 8 percent; Citigroup Inc., 5.5 percent; U.S. Bancorp, 5.1 percent; and Wells Fargo & Co., 5.1 percent.

NO RISK for VISA; the banks are responsible for the cardholders that don’t pay their bills. What could be better than that? Tell me!