CF Industries (CF) Shares Rise 22% In 6 Months: Here's Why

Shares of CF Industries Holdings, Inc. (NYSE:CF) have gained 21.8% in the past six months. The stock has outperformed the industry’s decline of 5.6% over the same time frame.

CF Industries has a market cap of around $11.1 billion. Average volume of shares traded in the past three months was around 2,253.4K. The company has expected long-term earnings per share (EPS) growth rate of 6%.

Factors Driving the Rally

Better-than-expected second-quarter 2019 results as well as upbeat view for 2019 are contributing to the rally in the company’s shares.

In the second quarter, the company’s adjusted EPS rose more than two-fold year over year to $1.28. The figure also surpassed the Zacks Consensus Estimate of 81 cents.

Net sales rose 15.5% year over year to $1,502 million on the back of higher average selling prices across all major products. It also topped the Zacks Consensus Estimate of $1,373 million.

CF Industries is optimistic about the nitrogen fertilizer industry and expects fundamental factors to be positive in the near and the long term.

The company expects demand for nitrogen in North America to remain strong in the near term, driven by the impact of adverse planting and growing conditions in many parts of the United States in 2019. Historic flooding is expected to reduce corn production in 2019 due to considerably lower planted acres and yields. The company expects these factors to create a strong price incentive for farmers in the United States, which will boost planted corn acres considerably in the next two seasons.

Globally, demand for urea from Brazil and India are expected to stay strong over the next two years. Through the end of June 2019, urea imports to India were 3.5 million metric tons, up 11% year over year, as stated by the company. Moreover, urea imports to Brazil for 2019 are expected to rise.

Zacks Rank & Key Picks

CF Industries currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation (NYSE:KGC) , Alamos Gold Inc (TSX:AGI) and Arconic Inc (NYSE:ARNC) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 160% for 2019. The company’s shares have surged 66.8% in the past year.

Alamos Gold has projected earnings growth rate of 320% for the current year. The company’s shares have rallied 33.6% in a year’s time.

Arconic has an estimated earnings growth rate of 50% for the current year. Its shares have moved up 20.9% in the past year.

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