CHS, Inc. Reports Better 3rd Quarter 2010 Results

July 9, 2010

CHS, Inc. (NASDAQ: CHSCP) reported net income of $145.4 for the 3rd quarter of 2010 compared to $64.6 million for the same period in 2009. Revenues were up slightly to $6.6 billion compared to $6.2 billion for the 3rd quarter of 2009.

Earnings for the quarter benefited from substantially higher margin and demand for both grain and crop nutrients. CHS also saw higher earning from its propane, lubricants and renewable fuels marketing business.

CHS is a membership cooperative formed under the laws of Minnesota. This basically means that the Company does not have common stock that is traded on any exchange and membership is limited. So how can you invest with CHS? The Company does have a publicly NASDAQ traded preferred stock. The holder of the preferred stock is entitled to an 8% dividend based on the issue price of $25. The preferred does have preferred liquidation rights of $25 per share and can be redeemed by the company at anytime for $25 per share. The preferred is not exchangeable or convertible in to any other security or property.

The stock currently trades at in the $27.50 – $28 range so there is some redemption risk, but it does not appear the company is motivated to do so. This could be an interesting way to have a stable investment in the agriculture, energy and refined products industries. I would not expect this stock to move much one way or the other, but you can lock in a nice dividend with price stability.

CHS, Inc. is a diversified energy, grains and foods company. CHS is owned by farmers, ranchers and cooperatives. CHS supplies energy, crop nutrients, livestock feed, grain, food and food ingredients. CHS also provides business solutions including insurance, financial services, and risk management. The Company also operates petroleum refineries and pipelines. The company market and distributes its refined products under the Cenex brand and it includes refined fuels, lubricants, propane, and renewable energy products.

Position: The author does not have membership in or own preferred shares of CHS, Inc at the time of this article.

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