April 23 (Bloomberg) -- Intrepid Potash Inc.'s initial public offering may mark the start of a bubble among fertilizer stocks, which have soared during the past couple of years along with demand for all kinds of crops.

After surging 58 percent in its first day of trading, Intrepid -- the largest U.S. producer of potash, according to its IPO prospectus -- is valued at 201 times last year's pro-forma earnings of 25 cents a share.

This makes the Denver-based company's shares more costly than those of Cisco Systems Inc., the world's biggest maker of computer-networking equipment, when the Internet bubble reached its high point in March 2000. Cisco peaked at 193 times profit, according to data compiled by Bloomberg.

Intrepid has by far the highest price-earnings ratio, calculated by adjusting last year's profit for the IPO and related transactions, out of 35 fertilizer stocks worldwide. Even so, shares of many of its peers are also rather expensive.

Russia's OAO Uralkali, named in Intrepid's prospectus as the only other publicly traded potash specialist worldwide, is valued at 70 times earnings. Potash Corp. of Saskatchewan, the world's largest crop-nutrient producer by market value, trades at 64 times. The comparable ratios for MSCI Inc.'s benchmark indexes of emerging and developed markets are about 16 times.

The comparison shows how much investors expect from these companies as prices climb for fertilizers, used to grow almost half the world's food. Uralkali, based in the central Russian city of Berezniki, has set the pace by soaring sixfold in the past 12 months. Most of the others have at least doubled.

Surpassing $1,000

Even an increase of this magnitude doesn't seem all that outlandish, judging by what's happened to the price of potash and other fertilizers lately.

List prices of potassium chloride, a form of potash, averaged $502 a ton in the U.S. Midwest for the first quarter, according to the Intrepid prospectus. That's more than twice the $214 average for all of last year, based on sales made by Potash Corp. and two other producers, Agrium Inc. and Mosaic Co.

Uralkali, which has boosted prices fivefold during the past 18 months, cracked the $1,000 barrier yesterday. Asian customers of Belarusian Potash Co., the company's export trader, will have to pay that price per metric ton on shipments beginning July 1. Brazilian customers will pay as much as $1,010.

Fertilizer producers are benefiting from a growing dependence on crop nutrients as populations increase and development reduces the amount of land fit for cultivation. Global fertilizer demand is rising 5 percent a year and potash output can't keep up, Uralkali said earlier this month.

Energy Demand

Agriculture accounted for 64 percent of Intrepid's sales in 2007, the prospectus said. Most of the rest came from industrial companies, especially oil and gas drillers, which use potash in conjunction with new wells.

Energy prices are booming along with agricultural commodity prices, so it's easy to see why the company's shares are valued so highly. Then again, booms have a habit of going bust. It's dangerous to assume this one will be an exception.

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Royal Bank of Scotland Plc's expansion under Fred Goodwin, its chief executive officer since 2000, has enabled the company to take its rightful place among the world's biggest financial institutions. This didn't happen in a way that he intended.

The 12 billion-pound ($24 billion) rights offer that Royal Bank announced yesterday is the biggest single capital-raising attempt by a financial company worldwide since July, according to data compiled by Bloomberg.

Assuming all the underlying shares are sold, the U.K.'s second-largest lender would raise more capital for the period than any company except Citigroup Inc. and UBS AG, the biggest banks by assets in the U.S. and Switzerland, respectively.

Royal Bank expects to raise 4 billion pounds of additional capital by selling assets, especially its insurance unit, built through multiple takeovers during Goodwin's tenure. The company, based in Edinburgh, can use the money after taking 5.9 billion pounds of first-quarter writedowns on U.S. mortgages, buyout loans and other debt issues.

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Almost a year has passed since SunTrust Banks Inc. sold part of a stake in Coca-Cola Co., the world's largest soft-drink maker, that it has held since 1919. The bank is doing everything possible to suggest it's in no hurry to unload the rest.

SunTrust yesterday affirmed plans to raise about $1 billion in capital from its Coke stock by quarter's end. ``The preferred approach does not reflect a simple outright sale,'' CEO James M. Wells III said during a conference call.

Two possible alternatives come to mind: a so-called forward sale, in which the bank agrees to deliver stock later, or a sale of preferred stock convertible into Coke shares. SunTrust -- based in Atlanta, like Coke -- owns 43.6 million shares, or a 1.9 percent stake.

Whatever happens, the 45 percent drop in SunTrust's first- quarter profit and the 10-fold jump in loan-loss provisions may force its hand. Its Tier 1 capital ratio of 7.25 percent, a sign of its ability to withstand loan losses, is among the lowest for members of the KBW Bank Index even after rising last quarter.

(David Wilson is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: David Wilson in New York at dwilson@bloomberg.net

Last Updated: April 23, 2008 00:01 EDT