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So was that good news or bad news that Potash of Saskatchewan (POT) announced this morning, April 28?

For the first quarter of 2010 the company reported earnings of $1.47 a share and revenue of $1.71 billion. Both numbers beat Wall Street projections of $1.32 per share for earnings and $1.48 for revenue.

Clearly good news.

But then the report gets confusing.

For the full 2010 year Potash of Saskatchewan told Wall Street to expect earnings of $4.50 to $5.25 a share. Now that’s hugely below the $5.52 a share of the current Wall Street consensus. However, it’s an increase from the company’s own prior forecast of $4.00 to $5.00 for the year.

Wall Street seems to have decided that the company is simply low-balling its estimates for 2010 so that it’s sure to beat them. That’s not an outlandish conclusion since company management was badly burned at the end of 2009 when earnings and sales repeatedly came in below forecast.

But I think some recent trends in the potash market could make these new numbers more than just gamesmanship from management. Potash prices have stabilized but they don’t look like they’re rallying the way Wall Street hoped (and still hopes.) And demand, while likely to climb 50% from 2009 levels to 50 metric million tons, according to the company, still doesn’t look strong enough to soak up all the supply in the sector. In its earnings release Potash of Saskatchewan said that it anticipates producing 7.4 million to 8 million metric tons. That’s still well below the company’s 11.2 million tons of capacity.

We “expect to initiate production curtailments for inventory control purposes over the course of the year,” the company said.

In other words 2010 will be what the company calls a transition year.

If you’re a long-term investor I suggest that you hold on through this transition. The stock remains in my long-term Jubak Picks 50 portfolio.

But if you have a time horizon of less than five years, I think your hold or sell decision will be determined by how rough you think that transitional year will be. In my opinion it could get pretty rough: This is a commodity stock and subject, therefore, to big swings with changes of sentiment on economic growth in the world’s emerging economies and with overall assessments of global growth.

I think the next six months anyway are shaping up as very uncertain on the growth front.

So I’m going to take advantage of the rally in the stock market today on optimism over a solution to the Greek crisis and sell these shares out of Jubak’s Picks.  I have a 14.1% gain on the shares since I added them to the portfolio on July 23, 2009.

Full disclosure: I will sell my personal position in Potash of Saskatchewan three days after this is posted.