Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Latin fertilizer giant Chemical & Mining Co. of Chile (NYSE: SQM) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at SQM's business and see what CAPS investors are saying about the stock right now.
Chemical & Mining Co. of Chile facts
Headquarters (Founded)
Santiago, Chile (1968)
Market Cap
$14.58 billion
Industry
Fertilizers and agricultural chemicals
Trailing-12-Month Revenue
$1.71 billion
Management
CEO Patricio Contesse (since 1990)
CFO Ricardo Ramos (since 1994)
Return on Equity (Average, Past 3 Years)
26.4%
Cash/Debt
$615.85 million / $1.3 billion
Dividend Yield
1.2%
Competitors
Agrium (NYSE: AGU)
Mosaic (NYSE: MOS)
PotashCorp (NYSE: POT)
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 98% of the 1,251 members who have rated Chemical & Mining Co. of Chile believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars DarthMaul09 and marc64, both of whom are ranked in the top 5% of our community.
Just last month, DarthMaul09 tapped Chemical & Mining Co. of Chile as a particularly powerful opportunity:
Lithium only represents a small part of the company's profits, most of it comes from fertilizer and other industrial chemicals. Lithium therefore has the potential to dramatically improve the company's revenue, especially if that next generation "miracle" battery ever becomes a reality. But for now the company will likely rise with the food commodity rally that may extend for most of this year.
Over the past three years, Chemical & Mining Co. of Chile has even grown its bottom line at a faster pace (27.7% per annum) than listed rivals Agrium (17.4%), FMC (NYSE: FMC) (9.2%), and PotashCorp (17.8%), as well as other fertilizer plays like Intrepid Potash (NYSE: IPI) (-7.9%) and Mosaic (27.2%).
CAPS member marc64 expands on the outperform case:
SQM is a potash fertilizer play in what looks to be a crunch year for food supplies, and maybe into the future. Whatever actually happens to food commodities, the farmer will be tempted to increase output.
Add to the fertilizer play, the sweet coincidence of electric cars hitting the market in a fairly big way this year. Count me among those who think the hum/whoosh of an all-electric car is much cooler than the din of exploding fossil fuels. ... It will take a while, but electric is compelling, and lithium is the high-performance choice for batteries.
The fact that SQM is the low-cost leader in lithium leverages up profit growth potential, and makes me feel a lot better about the high PE.
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