Compass Minerals posts record sales
October 29, 2008
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RELATED TICKERS: CMP
Compass Minerals, one of my favorite companies, reported excellent earnings today. The stock had tumbled to under $40 from a high of $80 in the middle of 2007.
Compass' main business is highway deicing salt. The company reported significant increases in salt sales from customers replenishing severely depleted salt stores from last year. Compass also reported a 20% increase in average selling price; this is consistent with earlier anecdotal news reports that there was a salt shortage and municipalities were having to pay high prices. Their consumer and industrial sales have also remained strong, indicating that their core business isn't economically sensitive.
The specialty fertilizer segment performed very well, with earnings growing nearly 450% compared to this quarter last year. The company also said they expected prices per ton to approach $1,000 at the end of the year.
My personal wild guess is that $1,000 per ton for SOP isn't sustainable in the long run. However, even if prices don't stay that high, Compass Minerals is still undervalued. Their main salt mines are much lower cost than their competitors and the business isn't economically sensitive. I'd be a buyer under $50.
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