Shares of CF Industries (CF - Analyst Report) hit a new 52-week high of $246.95 on Jan 10 and eventually closed at $246.16.
Year-to-date, CF Industries’ share price has recorded a return of 5.6%. Average volume of shares traded over the last three months was roughly 785.5K.
What is Driving CF Industries Up?
CF Industries´ adjusted earnings for the third quarter of 2013, reported on Nov 4, 2013, beat the Zacks Consensus Estimate. The company is benefiting from declining natural gas costs in North America and a solid start to the domestic planting season. Healthy domestic fertilizer demand and lower natural gas costs are expected to drive results moving ahead.
CF Industries is expected to spend roughly $2 billion till 2016 on capacity expansion and product upgrade projects, which are expected to offer roughly 1 million additional gross tons of ammonia and 3.5 million tons of combined UAN and urea capacity.
The company’s acquisition of Viterra Inc's 34% interest in the Medicine Hat nitrogen facility underscores its strategy to invest in lucrative projects. Following the acquisition, CF Industries’ annual marketable nitrogen volume rose by around 425,000 gross tons of ammonia and 275,000 tons of urea. The company is also progressing with its capacity expansion projects in Louisiana and Iowa.
CF Industries enjoys abundant cash flows, which can help it to improve its balance sheet, distribute cash to shareholders and invest in the growth of the business. The company’s Board has approved a new program to buyback shares worth up to $3 billion through Dec 31, 2016. CF Industries has bought back around 6.5 million shares so far in 2013. Moreover, the company has hiked its quarterly cash dividend by 150% to $1.00 per share from $0.40 per share.
The decline in natural gas prices has also been an advantage for CF Industries. The company’s Nitrogen segment is enjoying the benefit of abundant natural gas supply, driven by an increase in production in North American shale gas and favorable weather.
CF Industries currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other fertilizer companies worth considering are China Bluechip , The Andersons Inc. (ANDE - Analyst Report) and Intrepid Potash Corp. (IPI - Snapshot Report) . While China Bluechip holds a Zacks Rank #1 (Strong Buy), The Andersons and Intrepid Potash hold a Zacks Rank #2 (Buy).