When we’re looking to keep people’s attention, we don’t typically talk about a salt mine. That’s not the case today. We learned today that Compass Minerals CMP, a salt mine and fertilizer company Morningstar recommends, had a partial ceiling collapse due to geological movements in its mine in Goderich, Ontario. The good 
news is no one was hurt. The bad news is it will put a dent in their earnings for the next six weeks while they fix their main conveyer system (pictured).
This stock was 15% undervalued prior to this news and after today’s drop is now 28% undervalued. We saw this as a great opportunity and bought more for clients in our Growth, as well as the Moderate Income portfolios, since the stock pays a hefty 4.7% dividend now.
Morningstar states that 60% of CMP’s salt sales are used for highway deicing (not in Portland, of course). Demand for deicing salt has been down the last few years because of warmer than average winters and less snow days. But the warming weather is only partly to blame.
The warming trend will only produce 4% less snow days in our country over the next decade, but it will likely bring more volatile winters. This has been proven recently with record snowfall like they saw back East in 2014 and some of the warmest winters most the country experienced the last two years.
In short, here are the reasons we like the stock and bought more today at the depressed price:
- When winter is cold again, the stock will likely be at fair value again
- Overreaction today to a ceiling collapse that’s a short-term issue
- 4.7% dividend while we wait for stock to rise to fair value
Let us know if you have any questions,
Bruce Porter & Tim Porter, CFP®