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5 Reasons That Make CF Industries (CF) Stock a Solid Pick Now

Zacks

CF Industries Holdings, Inc. CF has been performing well of late. The company has seen its shares shoot up roughly 29% over the past three months.

If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Let’s take a look into the factors that make this fertilizer company an intriguing choice for investors right now.

What Makes CF an Attractive Pick?

Solid Rank & VGM Score: CF Industries currently has a Zacks Rank #1 (Strong Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

An Outperformer: CF Industries has trounced the industry it belongs to over a year. The company’s shares have shot up around 57% over this period, compared with roughly 22.7% growth recorded by the industry. An upbeat outlook for nitrogen fertilizer demand and pricing has contributed to the rally in CF Industries’ shares.



Positive Earnings Surprise History: CF Industries has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of roughly 44.6%.

Solid Growth Prospects: The Zacks Consensus Estimate for earnings for third-quarter 2018 for CF Industries is currently pegged at 10 cents, reflecting an expected year-over-year growth of 125.6%. Moreover, earnings are expected to register a staggering 672% growth in 2018.

Upbeat Outlook: CF Industries benefits from higher nitrogen demand driven by healthy corn plantations and cyclical recovery in the nitrogen fertilizer industry. The company expects strong demand in Brazil through the remainder of 2018. It sees a year-over-year increase in urea imports to Brazil during the second half of 2018 partly owing to the expected lost production from the scheduled closure of two Petrobras urea plants in August.

Moreover, CF Industries is poised to benefit from higher prices of nitrogen fertilizers. Higher production costs across Europe and China coupled with reduced production due to the enforcement of environmental regulations in China tightened global nitrogen supply and demand balance and boosted nitrogen prices during first-half 2018. These factors are expected to continue to drive prices in the third quarter. The company also expects demand in Brazil and India to support global nitrogen prices through the balance of 2018.

CF Industries Holdings, Inc. Price and Consensus


CF Industries Holdings, Inc. Price and Consensus | CF Industries Holdings, Inc. Quote

Other Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Methanex Corporation MEOH, KMG Chemicals, Inc. KMG and Cabot Corporation CBT.

Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #1. The company’s shares have gained around 20% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals has an expected long-term earnings growth rate of 28.5% and sports a Zacks Rank #2. The company’s shares are up roughly 23% over the past six months.

Cabot has an expected long-term earnings growth rate of 11% and carries a Zacks Rank #2. The company’s shares have gained around 12% over the past six months.

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