When Should You Buy CF Industries Holdings, Inc. (NYSE:CF)?

Let's talk about the popular CF Industries Holdings, Inc. (NYSE:CF). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$102 at one point, and dropping to the lows of US$80.91. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether CF Industries Holdings' current trading price of US$87.43 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CF Industries Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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What's The Opportunity In CF Industries Holdings?

According to our valuation model, CF Industries Holdings seems to be fairly priced at around 0.1% below our intrinsic value, which means if you buy CF Industries Holdings today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $87.54, then there’s not much of an upside to gain from mispricing. In addition to this, CF Industries Holdings has a low beta, which suggests its share price is less volatile than the wider market.

View our latest analysis for CF Industries Holdings

Can we expect growth from CF Industries Holdings?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for CF Industries Holdings, at least in the near future.

What This Means For You

Are you a shareholder? CF seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on CF for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on CF should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing CF Industries Holdings at this point in time. To that end, you should learn about the 2 warning signs we've spotted with CF Industries Holdings (including 1 which is concerning).

If you are no longer interested in CF Industries Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.