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Here's Why You Should Invest in CF Industries (CF) Stock Now

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CF Industries Holdings, Inc.’s (CF - Free Report) shares are up 32% over the past six months. It is well-placed to benefit from the rising nitrogen fertilizer demand in major markets and higher nitrogen prices.

We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.

Let's see what makes this Zacks Rank #2 (Buy) stock an attractive investment option at the moment.

An Outperformer

Shares of CF Industries have popped 73.5% over a year against the 31.5% rise of its industry. It has also outperformed the S&P 500’s roughly 10.8% decline over the same period.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Estimates Northbound

Over the past two months, the Zacks Consensus Estimate for CF Industries for 2022 has increased around 1.9%. The consensus estimate for second-quarter 2022 has also been revised 7.2% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

Solid Growth Prospects

The Zacks Consensus Estimate for earnings for the current year for CF Industries is currently pegged at $19.18, reflecting an expected year-over-year growth of 352.4%. Moreover, earnings are expected to register a 450.9% growth in the second quarter of 2022.

Superior Return on Equity (ROE)

ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for CF Industries is 35%, above the industry’s level of 23.1%.

Strong Demand and Prices Bode Well

CF Industries is gaining from strong nitrogen fertilizer demand. Global demand for nitrogen is expected to remain strong in 2022. Higher crop commodity prices are contributing to healthy demand globally. Industrial demand has also recovered from the pandemic-related disruptions.

In 2022, demand for nitrogen is expected to be driven by favorable industrial and economic activities and high levels of corn planted acres in the United States. Demand for urea imports from Brazil and India is also expected to be strong this year. Higher crop prices, high levels of planted corn acres and improved farm economics are likely to increase demand in Brazil.

The company, on its first-quarter call, said that it sees strong global nitrogen industry dynamics for the foreseeable future with robust global nitrogen demand along with tight nitrogen supply worldwide and wide energy differentials between North America and marginal production in Europe and Asia.

The company is also benefiting from higher nitrogen prices on the back of lower supply resulting from reduced operating rates across Europe and Asia due to higher energy prices. Higher nitrogen prices are driving its sales as witnessed in the last-reported quarter. The positive pricing environment is expected to continue moving ahead. Global nitrogen supply is expected to remain challenged due to higher energy prices in Europe and Asia along with export restrictions across certain countries.

 

 

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Albemarle Corporation (ALB - Free Report) , Cabot Corporation (CBT - Free Report) and Allegheny Technologies Inc. (ATI - Free Report) .

Albemarle has a projected earnings growth rate of 231.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 26.5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has gained roughly 8% in a year. The company flaunts a Zacks Rank #1.

Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 2.5% upward in the past 60 days.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 13% over a year.

Allegheny, currently sporting a Zacks Rank #1, has a projected earnings growth rate of 1,046.2% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised 18.3% upward in the past 60 days.

Allegheny’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI shares are up around 3% in a year.

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