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CF Industries (CF) Up 28% in 3 months: What's Driving the Stock?

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·4 min read
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CF Industries Holdings, Inc.’s CF shares have gained 28.3% over the past three months. The company has also outperformed its industry’s rise of 8.7% over the same time frame.

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

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

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. Higher crop commodity prices are contributing to healthy demand globally. Industrial demand has also recovered from the pandemic-related disruptions.

CF Industries 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 boosted the company’s sales in the last reported quarter. The positive pricing environment is expected to continue moving ahead. Higher nitrogen prices are expected to drive the company’s sales and bottom line.

The company, on its third-quarter call, said that it expects nitrogen pricing to be positive in 2021 as high global nitrogen demand and lower operating rates in Europe and Asia from high energy prices should sustain a tight global nitrogen supply and demand balance at least into 2023. It sees around 93 million planted corn acres in the United States in 2022, same as 2021. Moreover, CF Industries projects higher nitrogen demand in North America for industrial uses.

It also expects India to continue to tender for urea into the first quarter next year, due to reduced domestic urea production and lower-than-expected urea volumes secured from tenders earlier in 2021. Lower corn production this year also supported higher corn prices in Brazil and indicates higher planted corn acres in the current and upcoming planting season, the company noted.

CF Industries also remains committed to boost shareholders’ value by leveraging strong cash flows. It generated cash flow from operations of $687 million in the third quarter. During the third quarter, the company repurchased around 1.1 million shares for $50 million. Its board, last month, approved a new $1.5 billion share repurchase program.

CF Industries Holdings, Inc. Price and Consensus

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

CF Industries Holdings, Inc. price-consensus-chart | CF Industries Holdings, Inc. Quote

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Nutrien Ltd. NTR, AdvanSix Inc. ASIX and Intrepid Potash, Inc. IPI, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutrien has an expected earnings growth rate of 212.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 11.5% upward over the last 60 days.

Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 35% in a year.

AdvanSix has a projected earnings growth rate of 196.9% for the current year. ASIX's consensus estimate for the current year has been revised 6.8% upward over the last 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 125% in a year.

Intrepid Potash has a projected earnings growth rate of 244.7% for the current year. The consensus estimate for IPI’s current year has been revised 3.3% upward over the last 60 days.

Intrepid Potash beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It has a trailing four-quarter earnings surprise of roughly 132.9%, on average. IPI shares have surged around 154% in a year.


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AdvanSix (ASIX) : Free Stock Analysis Report

Nutrien Ltd. (NTR) : Free Stock Analysis Report

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