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Trade-Ideas: CF Industries Holdings (CF) Is Today's "Water-Logged And Getting Wetter" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified CF Industries Holdings (CF) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified CF Industries Holdings as such a stock due to the following factors:

  • CF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $112.7 million.
  • CF has traded 91,809 shares today.
  • CF traded in a range 207.4% of the normal price range with a price range of $8.11.
  • CF traded below its daily resistance level (quality: 23 days, meaning that the stock is crossing a resistance level set by the last 23 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in CF with the Ticky from Trade-Ideas. See the FREE profile for CF NOW at Trade-Ideas

More details on CF:

CF Industries Holdings, Inc. manufactures and distributes nitrogen and phosphate fertilizer products worldwide. It operates in two segments, Nitrogen and Phosphate. The stock currently has a dividend yield of 1.6%. CF has a PE ratio of 9.8. Currently there are 5 analysts that rate CF Industries Holdings a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for CF Industries Holdings has been 934,900 shares per day over the past 30 days. CF has a market cap of $13.0 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.97 and a short float of 3% with 3.38 days to cover. Shares are up 5.1% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates CF Industries Holdings as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, CF's share price has jumped by 31.92%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CF should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 2.53, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for CF INDUSTRIES HOLDINGS INC is rather high; currently it is at 52.07%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 24.56% significantly outperformed against the industry average.
  • CF, with its decline in revenue, underperformed when compared the industry average of 12.0%. Since the same quarter one year prior, revenues fell by 10.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Chemicals industry and the overall market, CF INDUSTRIES HOLDINGS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.

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