If You Invested $1000 in CF Industries a Decade Ago, This is How Much It'd Be Worth Now

For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.

The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.

What if you'd invested in CF Industries (CF) ten years ago? It may not have been easy to hold on to CF for all that time, but if you did, how much would your investment be worth today?

CF Industries' Business In-Depth

With that in mind, let's take a look at CF Industries' main business drivers.

CF Industries Holdings, Inc., headquartered in Deerfield, IL, is one of the largest manufacturers and distributors of nitrogenous fertilizer and other nitrogen products globally. The company’s principal nitrogenous fertilizer products are ammonia, granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN).

CF Industries is a leading nitrogen fertilizer producer in North America. The company operates two of the largest fertilizer complexes in North America, one in Donaldsonville, Louisiana, United States and the other in Medicine Hat, Alberta, Canada.

Roughly 27%, 29%, 27% and 8% of its total sales in 2021 came from its Ammonia, Granular Urea and UAN and AN segments, respectively, while the “Other” segment accounted for the balance. The company completed the divestment of its phosphate unit to The Mosaic Company in March 2014.

In April 2010, CF Industries acquired rival Terra Industries for $4.7 billion. With the acquisition, the company has become the global leader in the nitrogen fertilizer industry and has expanded geographically.

CF Industries, in October 2013, signed a definitive agreement to sell its phosphate mining and manufacturing business to fertilizer producer Mosaic for $1.4 billion in cash (including $200 million to fund CF Industries’ asset retirement obligation escrow). The transaction was closed in March 2014.

Under the deal, CF Industries disposed the Hardee County phosphate rock mine, the Plant City phosphate complex, an ammonia terminal, phosphate warehouse and dock at the Port of Tampa and the site of the former Bartow phosphate complex to Mosaic.

CF Industries and Mosaic also entered into a long-term ammonia supply agreement, under which, the former agreed to supply ammonia to Mosaic from its Donaldsonville, LA, nitrogen complex and its 50% owned Point Lisas Nitrogen Ltd. (PLNL) facility in the Republic of Trinidad and Tobago.

In 2016, the company completed its capacity expansion projects at Donaldsonville and Port Neal. The projects involved the building of new urea, ammonia and UAN facilities at Donaldsonville complex along with new urea and ammonia facilities at the Port Neal complex. The facilities have boosted the company’s overall production capacity by roughly 25%.

Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in CF Industries ten years ago, you're probably feeling pretty good about your investment today.

According to our calculations, a $1000 investment made in May 2012 would be worth $3,020.86, or a gain of 202.09%, as of May 24, 2022, and this return excludes dividends but includes price increases.

In comparison, the S&P 500 gained 201.30% and the price of gold went up 14.15% over the same time frame.

Going forward, analysts are expecting more upside for CF.

CF Industries’ earnings or the first quarter matched the Zacks Consensus Estimate while sales beat. The company is well placed to benefit from higher nitrogen demand in major markets. Demand for nitrogen is expected to be strong in North America, driven by healthy corn acres in the United States.  Increased planted corn acres is also likely to drive demand in Brazil. CF Industries is also seeing a rebound in industrial demand from the pandemic-led disruptions. Higher nitrogen prices will lend support to its bottom line. It remains committed to reduce debt and boost shareholders’ value. It has also outperformed the industry over a year. However, higher natural gas costs are expected to weigh on the company’s margins.  Ammonia production is also expected to remain under pressure. The company also faces logistics challenges.

Shares have gained 7.03% over the past four weeks and there have been 3 higher earnings estimate revisions for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.
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