What’s Hot? Food and Natural Resources

If you’re watching the earnings during earnings season, many companies have been meeting or slightly exceeding estimates.

We’ve heard some bad news- specifically from GE and, now, Starbucks. The economy is slowing and the restaurants and retailers are going to have a hard time of it.

But the food and natural resources companies are all booming. They’re not just beating estimates, they’re beating it big.

Potash (POT), the Canadian fertilizer company, reported earnings this morning and, despite estimates rising over the last few weeks, still beat by 22 cents.

Potash said surging global food demand led its first-quarter net income to more than double to $566 million, or $1.74 per share. From the AP:

The Saskatoon, Saskatchewan-based company raised its second-quarter earnings per share estimate to a range of $9.50 to $10.50, up from its previous forecast for earnings per share in a range of $6.25 to $7.25.

The company raised its guidance based on “surging global food demand.”

Plastics? That was the 1970s. Right now, it’s fertilizers and farming.

Freeport McMoran (FCX) reported yesterday and doubled its sales from a year ago. Also saw profits soar. The company beat estimates by over 60 cents. From the AP:

Net income rose to $1.12 billion, or $2.64 per share, in the three-month period that ended March 31, compared with $476 million, or $2.02, a year earlier.

Quarterly sales jumped to $5.67 billion from $2.25 billion.

“Given the very strong prices for copper, gold and molybdenum, it was a great quarter for us,” Freeport Chief Executive Richard C. Adkerson said in a conference call with analysts.

Molybdenum is an element that’s used in steel, cast iron, and metal alloys to enhance strength, toughness, and resistence to corrosion.

What’s going on here? I thought the world was in a recession? If so- there is no reason copper prices should be near record highs. And steel demand should be slowing, not growing.

Maybe there is NO recession in the rest of the world except for the United States?

Neither Potash nor Freeport is seeing a global slowdown.

Something to keep in mind when investing. The sales, and profits, from overseas have been very, very good for most companies this earnings season.

The place to be appears to be in food and natural resources. If that is true, then maybe the global boom will go on- just without the United States.

(The author of this article owns shares in both Potash and Freeport McMoran.)