+ Watch RNF
on My Watchlist
I bought this stock at $24 last July and have almost doubled my mine. I should have recommened it then. They built fertilizer plants in the midwest where the corn & soybeans grow. They use cheap natural gas to make the fertilizer. After last year's drought, corn supplies are low. Just look at the ethanol plants shutting down because they either can't get corn or can't make any money for what they have to pay. I expect a lot of corn to be planted in 2013 and a lot of fertilizer will be needed. They are in the perfact place with cheap raw material to make a lot of money. They just completed a new plant, which is why I believe the last quarter took a hit. I look forward to better results this quarter as spring planting season gets underway.
Two reasons 1) Nitrogen player that continues to move upward 2) Dividend that pays +6%. Best of both worlds
Food production becomes more important as the population grows and land resources become more scarce.
Great fundamentals and industry is a growth industry with this company the leader
This red thumb could get out of hand quickly given the nearly 13% dividend that will get factored into my starting price. But I think the market cap at Rentech is what has really gotten out of hand. While I have no idea about their capacity or plans for future upgrades I do know that my current investment in CVR Partners is on track to increase capacity by 50% in 2013. Simply comparing the two: RNF has a market cap of $1.4 billion and $119 million in shareholders' equity. UAN has a market cap of $1.88 billion and $477 billion in shareholders' equity. I believe CVR Partners is better equipped to grow that number, increase share price from the current level, and sustain its dividend. I cannot say the same about Rentech. Based on other nitrogen industry's metrics I would give RNF a fair value of around $18-$20 per share. This could happen in a number of ways - the easiest being an announcement that slashes the dividend. I'll take my chances.
EPS Ranking 83
drought - need more fertilizer
Great Income Play with a decent amount of growth thrown in for good measure.
Increased demand for better and more food, attractive dividend structure
With an anticipation of $2.86 distribution for 2012, at current price that makes for a nice yield.
need fertilizer for food.
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