CF Industries Holdings (CF) Falls Further As It's Water-Logged And Getting Wetter

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 $157.2 million.
  • CF has traded 119,577 shares today.
  • CF traded in a range 279.1% of the normal price range with a price range of $10.52.
  • CF traded below its daily resistance level (quality: 22 days, meaning that the stock is crossing a resistance level set by the last 22 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.

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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 8.0. 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 659,300 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 2.05 and a short float of 3.6% with 3.23 days to cover. Shares are up 8.6% 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, increase in net income, notable return on equity, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • Powered by its strong earnings growth of 99.38% and other important driving factors, this stock has surged by 27.71% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 74.3% when compared to the same quarter one year prior, rising from $406.50 million to $708.50 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Chemicals industry and the overall market, CF INDUSTRIES HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $750.00 million or 10.50% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -14.28%.
  • 48.39% is the gross profit margin for CF INDUSTRIES HOLDINGS INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CF's net profit margin of 62.55% significantly outperformed against the industry.

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

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