Beyond The Trade

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Hey Trader,

Today, we have another round of trading news and information from our top analysts here at Traders Agency. And of course, our Trade of the Day.

• Stocks: US stocks took a pause despite the good economic news, including a big addition of 390,000 jobs created in May.
• Bonds: US Treasurys gave back a bit in price as yields edged up a bit higher again. This comes even as employment costs showed signs of coming under control in the jobs report.
• Commodities: US energy prices gained even further as metals were a bit mixed. And despite the overall agricultural price index gains presented by the UN FAO (Food and Agriculture Organization), crops were easing up in pricing for the day.
• Digital Currencies: Digital currencies were all down for the leading coins, trading along with stocks.
• Data Check: The FAO Food Price Index, as noted above, stayed near its historic high, aiding agricultural companies as presented below. The jobs data for the US showed further gains along with some positive wage data.

To keep me up on what you’re thinking or what you want to see us cover – you can always email me directly at neilgeorge@tradersagency.com.

Now, on to our Trade of the Day…

The Mosaic Company

Agricultural food products are some of the hottest commodities right now in the markets. Year to date, crop prices for corn are up by over 22%, soybeans are up by over 27% and wheat is up by over 35%.

And today, we got the leading price index for agricultural food products from the United Nations Food and Agriculture Organization (FAO) that remains near its all-time high.

This was already underway even before the Ukraine-Russia conflict that only made crop prices rise even more strongly. In addition, many of the core chemical nutrient ingredients such as phosphates and potash are also being dramatically impacted in supply as the conflict zones are some of the suppliers of these and other agricultural nutrient products and ingredients.

This is now bringing in the US Department of Agriculture (USDA), which announced a new program to support US crop nutrients and fertilizer products. It is being rolled out under the USDA’s Community Credit Corporation (CCC). 

It will focus on US-sourced fertilizer and related products with millions of dollars in grants to support the manufacture and purchase of these products to enhance US crop production.

The Mosaic Company (MOS) is the Plymouth, Minnesota-based producer and distributor of phosphate and potash agricultural products as well as other crop yield enhancing products for US and global farming operations. 

I presented the stock to you in March, and since then it has gained as the market has sold off. And I presented it again last month resulting in a further gain that combined has brought the stock up to a total return of over 52% for the year to date.

It is already faring quite well even before the announced USDA grant program to support the company and its customers. Revenue is climbing significantly with the recent quarter showing a gain of over 70%. 

And it sells more with positive margins that on an operating basis are running at 20%. In turn, the company is delivering a return on its shareholders’ equity of over 25%. It does this with great credit as the company has a great deal of cash on hand as well with limited debts on a debt to asset basis.

The shares are up in price so far this year by over 52% as noted above in total return but recently have taken a pause, providing another entry opportunity right now. And it is not expensive as the shares are now only valued at 1.8 times the company’s intrinsic (book) value and 1.6 times its trailing (and significantly rising) sales on a price to sales basis.

Add in the USDA grant program, and the company is in a prime market at a prime time. This makes The Mosaic Company a great Trade of the Day.

The Mosaic Company Price -- Source: TradingView

With the current price at $59.67, MOS is a buy under $62.52 with a near-term target of $79.25 and even more beyond that. And for safety, consider a stop at $47.01.

Now, on to the best of Traders Agency…

Finding Bigger Gains from Smaller Stocks

Sometimes, traders can actually find bigger gain opportunities from smaller stocks in the US market. 

Smaller stocks tend to be focused on US customers and market segments, which insulates them from currencies, including the stronger US dollar, as well as global economic challenges, as the US is currently setting up to be one of the better performing economies on the planet.

Recently, the Russell 2000 Index has been outperforming the large-cap focused S&P 500 Index by more than two to one since May 13 through today.

And with that, I have a trade opportunity shaping up this week for the Russell 2000 Index futures contract (RTY) that I want to share with you today.

So, here’s how the trade is shaping up this week and how I see smaller stocks potentially setting up for bigger gains for you.

How We Booked a 21% Gain in Just Over Two Weeks

On Tuesday, I explained that the energy sector is in the driver’s seat for earnings and revenue growth this year.

For the first quarter, the energy sector far surpassed all other sectors in terms of year-over-year earnings growth, coming in at 257.8% year-over-year. It’s the same story for revenue growth as well. 

With energy prices on the rise, energy companies have been making more earnings and revenue.

Add in the fact that most other sectors are under heavy selling pressure, and it’s no wonder why energy stock prices are rising.

These tailwinds helped to push up the price of one stock in particular that I’ve been telling you about lately.

And today I want to cover exactly how we booked a 21% gain in the shares in just over two weeks…

Don't Let Emotions Mess Up Your Trading Strategy

Our emotions may be a major part of our lives as human beings, but they frequently lead us astray when we need to make rational decisions. 

When it comes to trading, the latter point is almost always true. As a result, having an emotional reaction to something that happens in the market can push traders to make poor decisions.

And if we do wind up in a losing trade, how we handle it has a long-term effect on our entire trading strategy. 

It's okay to feel upset when you've done everything correctly yet still come up short. But there is a proper way to deal with your emotional reaction to a loss.

After years of being in the markets, I have developed some insightful tips on how to handle your emotional response to losing a trade in a way that won't prevent you from taking the necessary risks to win in the future.

Click here now for all the details…

Why I Don’t Chase Market Action

As traders, we are often anxious to get into a new position.

If the price gaps against us, we naturally want to chase it. Even if it gaps in favor of our trade direction, I find we want to do the same.

This is a trade plan detail that must be hammered out.

There are many different theories on this very subject matter. But personally, I’m a “let it come to me” trader…

If the price action doesn’t work out, then the trade wasn’t meant to be.

You have to be indifferent about it.

Because if price gaps in favor of my objective and I chase it, well... Can you guess the big mistake I just made?

Thank you for reading Beyond The Trade! Look for much, much more every day the markets are open.

You’ll get further updates on all that is going on to make your job as a trader all the more profitable and better informed.

I’ll also continue to provide updates on the stock ideas I bring to you in Beyond The Trade.

To provide feedback, suggestions and questions, feel free to email me directly at neilgeorge@tradersagency.com.

Your Friends,

Beyond the Trade

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