Sell
CF Industries (CF)
from Dow Theory Forecasts, recommended at $207 in the August 9, 2012 Daily Alert and in Investment Digest issue 725.
CF Industries is being removed from the Buy and Long-Term Buy lists. The stock looks cheap from nearly every angle in Quadrix but lacks the growth we prefer for our recommended stocks, with per-share profits projected to fall 13% this year and 12% in 2014. Nitrogen pricing remains weak, and guidance recently issued by rivals hints that demand could be slowing.
In late July, activist investor Daniel Loeb disclosed his stake in the company, citing CF’s potential to boost its dividend. At the moment, chances of a big dividend bump appear cloudy at best. CEO Stephen R. Wilson suggested last month CF would maintain a course that emphasizes stock buybacks over dividend growth. The stock rallied after CF announced Wilson will retire on Jan. 1. But Wilson’s successor, W. Anthony Will, currently oversees the company’s ambitious plan to expand capacity, so he may be just as unwilling to devote the resources required for a significant dividend hike. The stock is now rated B (average).
Richard J. Moroney, Dow Theory Forecasts, 800-233-5920, September 23, 2013