AGRIUM SHARES PUTTING MAX EFFORT TO HOLD SUPPORT AND GIVE THE BULLS SOME HOPE

Agrium Inc.

shares have come down around 10% in the last few months (as the market has remained fairly buoyant) after a nice upside run in late-2014. As we move into the latter part of 2015, will the company be able to post strong enough results in order to give its stock the boost it needs to proceed higher? Will commodity prices globally give the company's customer base the cash it needs to maintain, if not increase, its purchases from Agrium? Let's take a look at the fundamental and technical picture for Agrium to get a better idea of what may be in store for shareholders going forward… What the bulls see in Agrium… • Some cheap valuation metrics: o An enterprise value of $18.78 billion that trumps the market capitalization of $14.9 billion o A price-to-sales ratio of 0.94 o A price-to-book ratio of 2.39 o A PE ratio of approximately 12 versus estimated EPS growth of 17% for next year • Net profit margins of 4.67% that spin off positive operating free cash flow of $1.26 billion annually • A return on equity of 12.43%' • An acceptable balance sheet picture: o A debt-to-equity ratio of 76.35% o A current ratio of 1.35 • An attractive dividend yield of 3.4% annually What the bears see in Agrium… • Negative levered free cash flow of $521.88 million for the year • A return-on-assets of only 3.93% • $903 million in cash versus total debt of $4.8 billion • A fairly low estimated revenue growth rate of 4.6% for next year The technical take on AGU shares… Technicians note that Agrium shares are trying to put in a short-term bottom after posting a "hammer" candle in May on the monthly chart. The hammer candle in May created a support level at roughly $102.75 – which roughly corresponds with the horizontal line support created by the November intra-month peak. The long-term uptrend line, however, comes in lower at around $97 - $98. Resistance for AGU shares, they note, comes in just above $110 and is backed up by additional resistance at just under $120. They further note that there is no clear advantage for either the bulls or the bears in the very short-term. Overall… Based purely on the technicals for AGU, it appears that sellers will try their hand at new positions between $110 and $111. Meanwhile, buyers may enter cautiously at $102 - $103 and more aggressively at $97 - $98. Agrium and its brethren in the agricultural chemicals space would really benefit from a bit of an inflation scare. Commodities prices – especially in the ag space – have been depressed now for quite a while. This has clearly acted as a weight around the neck for AGU and the like. So, maybe once we start hearing chatter about global inflation – especially in food and food component prices – AGU will be on the ascent.