This Just In: Upgrades and Downgrades – Mosaic Co (MOS), Agrium Inc. (USA) (AGU)

Remember, too, that most of these stocks fall far short of the goal of generating free cash flow in line with their reported GAAP income. Rentech is worst in this regard — actually burning cash even as it claims to be earning $110 million a year on its income statement — but Potash, Mosaic, and Agrium all generate a whole lot less profit than they let on.

Foolish takeaway
Honestly, I agree with most of what Dahlman is saying about these stocks today. For the most part, they’re not as good as they look. If I’ve got one quibble, though, it’s that the analyst is too easy on Mosaic (whose numbers are just as bad as most of the rest) and too hard on the only stock on the list that presents a bargain: CF Industries.

Priced at a P/E ratio of just 7.2, CF is easily the cheapest stock on the list. Meanwhile, with a projected long-term growth rate of 12%, it’s tied with Rentech as the group’s speediest grower. Best of all, with $1.85 billion in trailing free cash flow, CF Industries is the only fertilizer company out there — literally, the only one — currently making more cash profit than it’s claiming to have earned under GAAP.

To my Foolish eye, it’s the only one of the five you should even consider buying.

The article This Just In: Upgrades and Downgrades originally appeared on Fool.com and is written by Rich Smith.

Fool contributor Rich Smith has no positions in the stocks mentioned above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he’s currently ranked No. 319 out of more than 180,000 members. The Motley Fool owns shares of CF Industries Holdings (NYSE:CF).

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