Monday, December 31, 2007

There Is A Real Shortage Of Agricultural Stocks

To quote Don Coxe from his December 28, 2007 Conference Call;

"We have a shortage. There's more of a shortage of agricultural stocks than there is of soy beans. So this is a good time for investors in this group but it's always dangerous when you've had the kind of runups that these have had to say, "Well next year is still going to be a good year." But if you think back to what happened when oil came off $22 and started its way up. When you got to $50 oil there were fewer people on board to say that we could have a run from there.

So remember that adjusted for inflation these grain prices are still at trivial levels. What people have got to adjust to is the idea that a bigger and bigger part of total consumer expenditures in the world are going to have to go on food and that's being resisted all over the place. You had the elections in Venezuela and Russia where they froze food prices during the election campaign and then they're surprised when there's scarcity in the stores and that's one of the things that beat Chavez. He thought he could by just extending the imperial arm continue to deliver cheap food to the voters and the urban mob. He got fooled.

So the food story is one of genuine scarcity of food and of stocks but you're right. The biggest scarcity is in the stocks themselves."

I have been searching for agricultural stocks and its been difficult to find anything that has not all-ready doubled or tripled.

I have found one income stock called Cervus LP. It trades on the Canadian Venture Exchange with the symbol CVL.UN-X. It trades at $16.50 and pays a $0.09 monthly ($1.08/year) distribution (6.6% yield). This company owns some John Deere dealerships in Western Canada as well as some construction equipment dealerships. It to has a big run up and is very illiquid. You can find out more by clicking here.

You can read a transcript of Don Coxe's December 28, 2007 Conference Call by Clicking here.

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