We are optimistic about CF Industries Holdings, Inc.’s CF prospects and believe that it is appropriate for investors to hold the stock for now as it is likely to sustain the momentum.
The company, with a market capitalization of approximately $9.8 billion, currently carries a Zacks Rank #3 (Hold). It has an estimated long-term earnings growth rate of 6%.
Let’s delve into the factors that make this fertilizer company an attractive pick.
An Outperformer: CF Industries has outperformed the industry it belongs to over the past year. The company’s shares have gained 1.7% as against 10.3% decline witnessed by the industry.
Strong Earnings Growth Prospects
The Zacks Consensus Estimate for 2018 earnings is currently pegged at $1.62 against the loss of 25 cents reported a year ago. The same for 2019 stands at $2.64, indicating 63.4% year-over-year growth.
Moreover, the Zacks Consensus Estimate for 2018 earnings has moved up around 6.5% over the past two months, reflecting analysts’ confidence in the stock.
CF Industries expects the global market fundamentals, which drove global nitrogen prices during the third quarter of 2018, to continue through the fourth quarter and in first-half 2019.
Moreover, 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, around four million more acres than 2018 levels. CF Industries expects this along with the expected increase in wheat plantings to drive nitrogen demand in North America. The company expects demand for urea in Brazil and India to support a tighter global nitrogen demand and supply balance into 2019.
Higher Prices to Support Margins
CF Industries is likely to gain from higher prices of nitrogen fertilizers. The company saw higher average selling prices across all segments in the third quarter of 2018. Global nitrogen supply and demand balance will continue to tighten and boost nitrogen prices further.
CF Industries Holdings, Inc. Price and Consensus
CF Industries Holdings, Inc. Price and Consensus | CF Industries Holdings, Inc. Quote
Stocks to Consider
A few better-ranked stocks are Verso Corporation VRS, The Mosaic Company MOS and Cameco Corporation CCJ.
Verso has an expected earnings growth rate of 570% for the current year and flaunts a Zacks Rank #1 (Strong Buy). The company’s shares have appreciated 26.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic has an expected earnings growth rate of 75.2% for the current year and a Zacks Rank #2 (Buy). The company’s shares have gained 15.2% in the past year.
Cameco has an expected earnings growth rate of 66.7% for the current year and a Zacks Rank #2. Its shares have rallied 20.3% in a year’s time.
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