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CF Industries (CF) Gains on Higher Nitrogen Demand & Prices

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We issued an updated research report on CF Industries Holdings, Inc. (CF - Free Report) on Jan 3.

Higher Nitrogen Demand to Drive Growth

In October 2018, the company stated that it expects the global market fundamentals, which drove higher global nitrogen prices during the third quarter of 2018, to continue through the fourth quarter and into the first half of 2019.

The company noted that the outlook for global nitrogen demand is positive for the first half of 2019. In the United States, farmers are expected to plant 93 million acres of corn in 2019, up 4 million acres from 2018 levels. Per the company, the aforementioned factor along with expected increase in wheat plantings is likely to boost nitrogen demand in North America.

CF Industries also envisions strong demand in Brazil in 2019. It projects higher urea imports to Brazil next year, courtesy of the closure of two Petrobras urea plants.

Higher Prices to Support Margins

CF Industries is benefiting from higher nitrogen prices. Higher production costs across Europe and Asia coupled with reduced production due to the environmental restrictions in China tightened global nitrogen supply as well as demand balance and boosted nitrogen prices in 2018. Higher nitrogen prices and strong execution have also enabled the company to achieve strong margins.

Price Performance

Shares of CF Industries have lost 7.1% in the past year compared with the industry’s 15.2 decline.

Zacks Rank & Other Stocks to Consider

CF Industries currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the basic materials space are Verso Corporation (VRS - Free Report) , sporting a Zacks Rank #1; along with Ingevity Corporation (NGVT - Free Report) and Cameco Corporation (CCJ - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Verso has an expected earnings growth rate of 63.5% for 2019. The company’s shares have rallied 33.7% in the past year.

Ingevity has an expected earnings growth rate of 21.5% for 2019. The company’s shares have gained 8% in the past year.  

Cameco has an expected earnings growth rate of 20% for 2019. Its shares have moved up 15.3% in a year’s time.

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