Trade-Ideas LLC identified

CF Industries Holdings

(

CF

) as a weak on high relative volume 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 $112.3 million.
  • CF has traded 266,555 shares today.
  • CF is trading at 2.64 times the normal volume for the stock at this time of day.
  • CF is trading at a new low 4.00% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on CF:

CF Industries Holdings, Inc. manufactures and distributes nitrogen fertilizers and other nitrogen products worldwide. The company's principal nitrogen fertilizer products include ammonia, granular urea, and urea ammonium nitrate solution. The stock currently has a dividend yield of 2.4%. CF has a PE ratio of 13. Currently there are 5 analysts that rate CF Industries Holdings a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for CF Industries Holdings has been 2.6 million shares per day over the past 30 days. CF has a market cap of $11.9 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 0.72 and a short float of 4.5% with 3.92 days to cover. Shares are down 12.4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates CF Industries Holdings as a

hold

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income and expanding profit margins. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from the ratings report include:

  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Chemicals industry average. The net income increased by 12.6% when compared to the same quarter one year prior, going from $312.60 million to $351.90 million.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.0%. Since the same quarter one year prior, revenues fell by 10.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • CF INDUSTRIES HOLDINGS INC has improved earnings per share by 22.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CF INDUSTRIES HOLDINGS INC increased its bottom line by earning $5.29 versus $4.93 in the prior year. For the next year, the market is expecting a contraction of 16.4% in earnings ($4.42 versus $5.29).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, CF INDUSTRIES HOLDINGS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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