Stuff Your Faces With Food And Your Portfolios With Agriculture (POT, CF, MOS, AGU, DBA)

There is nothing more American than stuffing your face. This highlights the very real problem of a lack of food in the world. There are plenty of countries where people are starving and there is a scarcity of harvestable land with which to plant. Investors see opportunity, whereas most other people would see this as a problem. Agriculture stocks and commodities have been on fire lately and I would look for them to continue their bullish run late into the second half of 2010 and subsequently beyond. Esteemed and respected commodity bull Jim Rodgers has one wish: for everyone to become a farmer. While this seems unlikely in anything other than Mr. Rodger's neighborhood (or make believe as I like to call it), there are certainly ways to profit off the food shortage. Nothing has been hotter lately than potash, phosphate and nitrogen. The leaders in this space are Potash

, Mosaic

, CF Indutries

and Agrium

. Potash the commodity is the one that gets the most attention out of the three commodities. Last week Potash Corp. announced its quarterly results and they were nothing short of outstanding. Potash Corp. also said it sees global demand getting stronger, not weaker. “As we have stated in the past, fertilizer applications can be deferred, but cannot be ignored. With growing demand for food and supportive crop economics, farmers have been motivated to begin addressing nutrient deficiencies in their soils. We believe this has established a strong foundation for improved fertilization practices and for the growth of our company,” said Potash Corp president & CEO Bill Doyle. This sector could also see a bit of an M&A premium as there have been rumors in the past that BHP Billiton

might look to expand their potash operations by acquiring Potash. My two favorite names in this sector are Potash and CF Industries, due to the fact that their ROE's are among the highest in the industry. CF's ROE is at 19.2% and POT's is over 23%. Return on equity is the hardest number to fudge and the respective returns are higher than the industry average of 19%. You could also take a look at the PowerShares DB Agriculture ETF

in this space as well. Both of these companies trade at attractive valuations for their 2011 earnings estimates and I would expect them to continue their tear higher. Disclosure: no positions in any companies mentioned Is POT a Buy, Sell or Hold? Click