CF Industries (CF) Stock Up 29% YTD: What's Driving the Rally?

CF Industries Holdings, Inc.’s CF shares have gained 29.1% so far this year. The company has also outperformed its industry’s rise of 19.7% over the same time frame. Moreover, it has topped the S&P 500’s 12.4% rise over the same period.

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

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What’s Favoring CF?

Strong demand of nitrogen fertilizer, higher nitrogen prices and upbeat outlook have contributed to the rally in the company’s shares.

CF Industries is benefiting from higher nitrogen prices as witnessed in the first quarter of 2021. The company’s average selling prices in the quarter were higher on a year-over-year basis across most segments due to lower global supply availability.

The company expects nitrogen pricing to be positive in 2021 as global nitrogen supply and demand balance has been significantly tightened by low global coarse grains stocks-to-use ratios as well as higher energy prices in Asia and Europe. As such, higher nitrogen prices are expected to drive the company’s sales and bottom line.

Moreover, CF Industries should gain from higher nitrogen fertilizer demand in major markets. Global nitrogen demand is expected to remain strong this year. Strong crop commodity prices are contributing to higher demand globally. Industrial demand has also recovered from the pandemic-related disruptions.

The company, in its first-quarter call, said that it sees around 90-92 million planted corn acres in the United States in 2021. It also expects higher canola plantings in Canada to support nitrogen demand. Moreover, CF Industries projects higher nitrogen demand in North America for industrial uses. The company anticipates nitrogen requirements in other regions to remain strong this year, which is likely to be driven by strong demand for urea imports from India and Brazil.

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 Nucor Corporation NUE, Cabot Corporation CBT and Impala Platinum Holdings Limited IMPUY.

Nucor has a projected earnings growth rate of 285.3% for the current year. The company’s shares have surged around 123% in a year. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot has an expected earnings growth rate of around 126% for the current fiscal. The company’s shares have rallied 55% in the past year. It currently carries a Zacks Rank #2 (Buy).

Impala Platinum has an expected earnings growth rate of 225.2% for the current fiscal. The company’s shares have surged around 137% in the past year. It currently carries a Zacks Rank #2.

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Zacks Investment Research

By Matt Earle

Matthew Earle is the Founder of MiningFeeds. In 2005, Matt founded MiningNerds.com to provide data and information to the mining investment community. This site was merged with Highgrade Review to form MiningFeeds. Matt has a B.Sc. degree with a minor in geology from the University of Toronto.

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