Potash, Innophos Look Like Smart Ag Plays

Fertilizer stocks this year have been among my favorites, and they've continued to climb on the back of incredible demand for food around the globe. After a short break starting in late April, shares of Potash Corp. of Saskatchewan are rallying again. They're up 52 percent, extending a stunning 200 percent jump over the past year.

Will gains continue? Steven Halpern of TheStockAdvisors.com (via BloggingStocks) points to Ticker Tape Digests' Leo Fasciocco, who sees earnings momentum continuing and a target price of $265 a share for Potash. They're around $219 today.

If you're looking for a less obvious way to play the fertilizer boom, check out Innophos Holdings. On Friday, Oppenheimer analyst Edward Young upped his price target for the specialty chemicals maker by $12, to $38, because of improving cash flow. Innophos makes a wide range of specialty phosphates, and tight supplies among fertilizer-makers mean rivals (most notably Mosaic) are diverting more of the stuff to agriculture. That means Innophos has been able to raise prices 60 percent this year.

Some caveats: Innophos is a small-cap name, which makes it risky in the current market, but shares could keep climbing as long as the rest of the sector can continue raising prices. Shares have already almost doubled this year, and profit-taking by some big shareholders could mean near-term volatility, but the trend seems to be in place if agriculture stays hot.