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CF Industries (CF) Up 16% in 3 months: What's Driving the Stock?

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CF Industries Holdings, Inc.’s (CF - Free Report) shares have gained 15.5% over the past three months. The company has also outperformed its industry’s decline of 0.2% over the same time frame. Moreover, it has topped the S&P 500’s 6.9% rise over the same period.

Let’s take a look into the factors behind this Zacks Rank #1 (Strong Buy) stock’s price appreciation.

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What’s Working in CF’s Favor?

Strong demand for nitrogen fertilizer, higher nitrogen prices and upbeat outlook have contributed to the run-up in the company’s shares.

CF Industries is gaining from higher nitrogen fertilizer demand in major markets. Global nitrogen demand is expected to remain strong this year. Strong crop commodity prices are contributing to higher demand globally. Industrial demand has also recovered from the pandemic-related disruptions.

The company, on its first-quarter call, said that it sees around 90-92 million planted corn acres in the United States in 2021. It also expects higher canola plantings in Canada to support nitrogen demand. Moreover, CF Industries projects higher nitrogen demand in North America for industrial uses. The company anticipates nitrogen requirements in other regions to remain strong this year, which is likely to be driven by solid demand for urea imports from India and Brazil.

CF Industries is also benefiting from higher nitrogen prices as witnessed in the first quarter of 2021. The company’s average selling prices in the quarter were higher on a year-over-year basis across most segments due to lower global supply availability.

The company expects nitrogen pricing to be positive in 2021 as global nitrogen supply and demand balance has been significantly tightened by low global coarse grains stocks-to-use ratios as well as higher energy prices in Asia and Europe. As such, higher nitrogen prices are expected to drive the company’s sales and bottom line.

Earnings estimates for CF Industries have also been going up over the past two months. The Zacks Consensus Estimate for 2021 has increased around 56.6% while the same for second-quarter 2021 has gone up 10.5%.

Other Stocks to Consider

Some other top-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , ArcelorMittal (MT - Free Report) and Univar Solutions Inc. (UNVR - Free Report) .

Nucor has a projected earnings growth rate of 344.9% for the current year. The company’s shares have surged around 133% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcelorMittal has an expected earnings growth rate of 1,229.9% for the current year. The company’s shares have surged around 186% in the past year. It currently carries a Zacks Rank #1.

Univar has an expected earnings growth rate of around 35.2% for the current year. The company’s shares have rallied 44% in the past year. It currently carries a Zacks Rank #1.

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