CF Industries Holdings, Inc.

CF Industries Holdings, Inc. (CF - Analyst Report) is operating in a very hot segment of the market but still retains extremely attractive valuations, trading at a steep discount to the overall market. The analyst community is bullish on the long-term prospects of CF, with the next-year estimate projecting 31% earnings growth.

Second-Quarter Results

In spite of the fact that CF's share price is trading down from its recent high above $170, the company second-quarter results, reported in late July, were nothing short of amazing.

Sales were up 37% from last year, to $1.16 billion. Net income totaled $288.6 million, a big jump from last year's $93.6 million. This produced earnings of $4.10 per share, ahead of analyst estimates of $3.56 per share.

Consistent Results

CF has been handily beating analyst estimates over the last four quarters, having done so by an average of 53 cents, or 29%.

CF noted that its sales volume tapered off slightly during the quarter from last year, but this dynamic was offset by significantly higher selling prices.

Representatives from CF also noted that the company expects strong global demand to pressure supplies and keep selling prices high for the remainder of 2008 and into spring of 2009.

Analyst Estimates

In accordance with the excellent quarterly results and bullish language, analysts have been quick to revise their earnings estimates upward. The current-year estimate now stands at $17.41 per share, up from $13.01 per share 90 days ago.

The next-year estimate is very bullish, with the consensus estimate pegged at $22.88 per share, a 31% earnings growth projection.

Valuations

Based upon the current-year estimate, this stock has tremendous value, carrying a forward P/E multiple of 7.1X, a steep discount to the overall market.

The Chart

Shares of CF appear to have found a stabilization point after dropping from the 52-week and all-time high, recently advancing above a short-term level of resistance just above $120. Moving forward, this stock looks well positioned for more gains because CF has been able to consistently deliver big-time earnings gains. Take a look at the chart.