Intrepid Potash, Inc. (NYSE:IPI) There’s simply not another company like Intrepid Potash, Inc. (NYSE:IPI), which is a key player in America’s agricultural industry. The company is responsible for 9 percent of the nation’s consumption of potash (potassium chloride) and is the only producer in the Western world solely dedicated to potassium-related products.
Shares of IPI are currently trading at $2.39, giving the company a total market cap of $250M. Over the trailing 52-week period, shares have traded as low as $0.65 and as high as $3.54. The current trading range of the stock is $1.75 – $2.55.
Intrepid Potash, Inc. (NYSE:IPI) two primary products are potash, which is used as a nutrient for agricultural crops, animal feed and some industrial processes, and a specialty fertilizer that it markets as Trio. This fertilizer contains a “trio” of important nutrients: potassium, magnesium and sulfate. The company also produces salt, magnesium chloride and metal recovery salts from its potash-mining processes.
When the company reported 3Q 2016 results on November 2, the outlook wasn’t great. The company reported a net loss o $18.2 million, compared to a year-earlier net loss of $8.1 million. In the management commentary about the 3Q earnings results, the primary factor for the big slide in net income was weakness in potash pricing. The price difference was so great that the company couldn’t make it up on volume.
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The one encouraging sign, though, is that the company appears to be moving away from the conventional potash production process, which involves underground mines in Carlsbad, New Mexico. Instead, the company is moving into above ground solar solution facilities. In fact, Intrepid Potash is a leader in solar evaporation production, one of the lowest cost, environmentally friendly production methods for potash.
By transferring more potash production into these lower cost solar evaporation facilities, it’s possible that the company could continue to lower its operational costs and improve its overall balance sheet. That would help the company regain its footing until pricing in the potash market firms up. The company also appears to be focusing on how certain by products of its potassium extraction and production can be re-used and re-combined in new ways.
So what’s ahead for the company? Right now, there are six equity analysts with recommendations out on the stock. One analyst has a OVERWEIGHT recommendation on Intrepid Potash, three analysts have a HOLD recommendation, and two maintain a SELL recommendation. The median price target for the stock is $1.72 and the high price target is $3.00. Given the stock’s current trading price of $2.39 and a 52-week high of $3.54, that represents some potential upside.
Going forward, analysts will keep an eye on the company’s move into solar evaporation production, which could be a way to boost the company’s performance in the short term. In a best-case scenario, of course, analysts would like to see the company continue to narrow its losses and eventually move into the black.
Over the long term, a bigger question might be whether the company needs to diversify further into other potassium-related products. The Trio fertilizer product hints as what’s possible for Intrepid Potash. The company, after all, is a market leader in the extraction, production and sale of potassium. Now it’s just a matter of coming up with some intrepid ideas of what to do with it all. For more news on Intrepid Potash, Inc. and other fast-moving penny stocks, please subscribe to OracleDispatch.com now.