RNR vs. PGR: Which Stock Should Value Investors Buy Now?
Fertilizer maker, CF Industries Holdings, Inc.’s CF stock looks promising at the moment. We are positive on the company’s prospects and believe that 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 delve deeper into the factors that make this Zacks Rank #1 (Strong Buy) stock an intriguing choice for investors right now.
What’s Working in Favor of CF?
An Outperformer: CF Industries has outperformed the industry over a year. The company’s shares have rallied around 23.6% over this period, compared with roughly 4.9% gain recorded by the industry.
Estimates Northbound: Annual earnings estimates for CF Industries have moved north over the past month, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2018 has shot up 63.6% to 90 cents per share. The Zacks Consensus Estimate for 2019 has also increased 36.6% to $1.53 per share.
Positive Earnings Surprise History: CF Industries has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 72.9%.
Solid Growth Prospects: The Zacks Consensus Estimate for earnings for 2018 for CF Industries is currently pegged 90 cents, reflecting an expected year-over-year growth of a staggering 460%. Moreover, earnings are expected to register a 69.8% growth in 2019.
Growth Drivers in Place: CF Industries benefits from higher nitrogen demand driven by healthy corn plantations and cyclical recovery in the nitrogen fertilizer industry. The company expects India and Brazil to be major drivers for urea demand in 2018. Based on the company’s analysis and published reports, India is expected to require the import of 500,000-1,000,000 metric tons of urea prior to end of March to meet its fertilizer requirements for this year.
Brazil also imported roughly 5.4 million metric tons of urea in 2017, up 15% year over year, and has emerged as a major importer of the nutrient. Import demand is also expected to be healthy in North America in 2018.
Moreover, CF Industries should benefit from higher prices of nitrogen fertilizers. Higher selling prices drove the company’s sales in the last reported quarter. Tighter global nitrogen supply and demand balance supported nitrogen prices in the quarter. The company expects higher energy costs in major producing regions, lower production in China, a weaker U.S. dollar, increased oil and freight costs and a steady global demand to support nitrogen prices during first-half 2018 at levels higher than the comparable period a year ago.
CF Industries should also gain from its efforts to boost production capacity. The company completed a new 400,000-ton urea equivalent per year DEF unit at the Donaldsonville complex in 2017 to support the growth of its diesel fluid business.
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 companies in the basic materials space include Kronos Worldwide, Inc. KRO, LyondellBasell Industries N.V. LYB and Eastman Chemical Company EMN.
Kronos sports a Zacks Rank #1 and has an expected long-term earnings growth rate of 5%. Its shares have rallied roughly 45% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
LyondellBasell carries a Zacks Rank #1 and has an expected long-term earnings growth rate of 9%. Its shares have rallied around 19% over a year.
Eastman Chemical has an expected long-term earnings growth rate of 8.9% and carries a Zacks Rank #2 (Buy). Its shares have gained around 35% over a year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Eastman Chemical Company (EMN) : Free Stock Analysis Report
Kronos Worldwide Inc (KRO) : Free Stock Analysis Report
LyondellBasell Industries N.V. (LYB) : Free Stock Analysis Report
CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
To read this article on Zacks.com click here.