Trade-Ideas LLC identified

CF Industries Holdings

(

CF

) as a "dead cat bounce" (down big yesterday but up big today) 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 $152.3 million.
  • CF has traded 1.1 million shares today.
  • CF is up 3.1% today.
  • CF was down 5.7% yesterday.

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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 2.6%. CF has a PE ratio of 12. Currently there are 5 analysts that rate CF Industries Holdings a buy, 1 analyst rates it a sell, and 6 rate it a hold.

The average volume for CF Industries Holdings has been 2.8 million shares per day over the past 30 days. CF has a market cap of $10.9 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.02 and a short float of 3.2% with 2.04 days to cover. Shares are down 19.5% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates CF Industries Holdings as a

hold

. Among the primary strengths of the company is its revenue growth. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 18.9%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • CF INDUSTRIES HOLDINGS INC's earnings per share declined by 25.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings 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 25.4% in earnings ($3.95 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Chemicals industry average. The net income has significantly decreased by 30.6% when compared to the same quarter one year ago, falling from $130.90 million to $90.90 million.
  • The debt-to-equity ratio of 1.36 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CF maintains a poor quick ratio of 0.96, which illustrates the inability to avoid short-term cash problems.

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