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The Company is a manufacturers and distributors of nitrogen and phosphate fertilizer products in North America.
Agriculture company with great valuation.
m i-c up
Reverse DCF = -3% Growth on EarningsGoing forward:Putting 3% growth for next 10 years, and 0% terminal growth, at 12% discount = $275. About 30% margin of safety.Seems like a bargain to me. Will analyse the business to understand why is it so low.
Leader in nitrogen fertilizer. "It’s a dirt-cheap company with thick margins. And it’sbenefiting from the biggest commodity trend in the world:cheap U.S. natural gas."
CF Industries trades at a little less than six times FCF once you net out the cash on hand. That's awfully cheap for a company that generates superior returns on invested capital to most of its peers (e.g., POT, MOS and AGU), has grown free cash flow per share at a rate of about 30% over the past five years, and has been using a portion of its excess cash to opportunistically repurchase shares at depressed multiples. With ~40% of nitrogen fertilizer still imported from overseas, there is room for growth even with additional capacity set to come on-board in North America between 2016 and 2018. CF will benefit from cost advantages vis-a-vis foreign competitors due to the lower costs of production in the US, not to mention lower transportation costs. On the latter point, the company is especially well positioned thanks to its strategically located facilities in the heart of the corn belt. This is also a bet that natural gas prices won't be revisiting the $6+ range again any time soon, although CF is hedged against rising prices. Bottom line: at less than six times free cash flow, I'm comfortable with the risks here and will be looking for an opportunity to pick up shares in the next few weeks.
Best AG stock for Potash, Nitrogen, and Ammonia. Much better than POT, MOS, MON, and EVEN AGRIUM (AGU), though AGU is also an OUTPERFORM
this fertilizer is Dirt Cheap.......hard to lose money if earnings stay consistent
Magic Formula 2013/07/10Large cap
Undervalued market leader in an emerging niche market. Currently valued at BV + 2x earnings.... Way too cheap
cheap and great free cash flow
Demand for nitrogen, CF's core product, is relatively inelastic because it is also the most widely applied nutrient. Corn can't do without nitrogen, and the U.S. is all ready for record spring planting this year. Industry leadership, low debt, solid cash flows, great margins -- CF is a complete package. For all the goodness, CF is trading the cheapest among peers at current price. A golden opportunity for Fools. Read more at: http://beta.fool.com/nehams/2013/04/16/call-for-action-this-golden-opportunity-will-slip/30996/
Agriculture stocks are a great place to be for the long-term. The population keeps going up so fertilizer is going to be very important to increase productivity.
CF provides a critical product to a critical industry and is priced below its competitors and the market.
good fundamentals, cheap on EBIT basis, good profitability
Limited growth upside due to US farm constraints. Plus corn acreage is at a huge 75 year high.
Risk is on farmers who hit big or fold bad depending on weather conditions. Regardless, fertilizers will flow, because the incentive is to produce bigger when there is a decent chance production will crash somewhere.
Growing nitrogen company for a hungry population
Right now it looks undervalued for its p/e and p/b with solid growth and profits. It is also financially healthy with excellent cash flow and little debt. The only reason I don't give it a longer time frame is because it does not have any real advantages in its business model.
As production of nitrogen and other fertilizers accelerates, eventually that production will turn into surplus, drive down historically high commodity prices, and erode CF's market and margin.
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