Tuesday, March 4, 2014

CF Industries (CF) 2014 Review

CF Industries manufactures and distribute nitrogen and phosphate fertilizers in North America.  The company, which went public in 2005, has grown profits from $.60 to $23.25 in 2013 and dividends from $.02 to $2.20 in the same time frame.  It has earned between 12% and 20% return on equity.  CF should continue its above average growth rate because:

(1) program to rationalize operations to reduce costs,

(2) recent acquisition of Terra has made it the leading global producer of nitrogen fertilizer,

            (3) stock buyback program,

            (4) falling natural gas prices, a key ingredient in the making of fertilizer.

Negatives:

(1)   price competition with its domestic competitors,

            (2) its business serves a highly cyclical industry.

            CF is rated A by Value Line, carries a 36% debt to equity ratio and its stock yields 1.7%.

      Statistical Summary

                 Stock      Dividend         Payout      # Increases  
                Yield      Growth Rate     Ratio        Since 2005

CF             1.7%         35%               17%                5
Ind Ave      3.2            22                  46                NA 

                Debt/                       EPS Down       Net        Value Line
                Equity         ROE      Since 2005      Margin       Rating

CF            36%            22%           2                 25%          A
Ind Ave     30               19            NA               15            NA

       Chart
           
            Note: CF stock made good progress off its October 2008 low, quickly surpassing the downtrend off its July 2007 high (straight red line) and the November 2008 trading high (green line).  Long term, the stock is in an uptrend (blue lines); intermediate term, it is in an uptrend (purple lines).  The wiggly red line is the 50 day moving average.  The Aggressive Growth Portfolio owns a full position in CF.  The stock currently on the Aggressive Growth Buy List.  The lower boundary of its Sell Half Range is $352. 




3/14

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