Huge Move In CF Industries, Should You Be Buying? (CF)

Bulls looking to catch a bottom are jumping into CF Industries (NYSE: CF) today, as the stock has jumped 7.34% to $63.30. The year to date sell off in CF has undoubtedly left a lot of investors deep in the red, as the stock has gotten crushed along with many commodity names. Year to date, CF has fallen 30.33%. In the last 52 weeks, the shares are down 21.26%. During the heart of the financial crisis, CF was trading in the $46-$50 range, before rallying strongly throughout much of 2009. Most of those gains, however, have evaporated. The sell off appears like it might be overkill at this point, and the investors that are jumping in the name today may be handsomely rewarded in the long term. Despite the high level of volatility in the share price, CF has actually added value for shareholders, unlike most company's who have lost value over the last 5 years. During that time period, CF has risen 253%. Those returns look a lot more appealing than what the S&P has offered over the last 5 years. The valuation on CF Industries looks unreasonably pessimistic about the longer term prospects of the global economy. The stock trades at a P/E of 10.43, a forward P/E of just 7.64 and a dirt cheap PEG ratio of 0.30. Analysts are anticipating that CF will earn $7.74 in fiscal 2010 and $8.27 in 2011. Revenues are expected to jump from $3.64 billion in 2010 to $4.28 billion in 2011. To be sure, CF is a very economically sensitive stock, and the reason that it has declined so precipitously is because of fears over another global slowdown and the European debt crisis - but the long term macro trends are still in place for this name to ring up huge returns on a longer term basis. From a trading perspective, CF also will provide some real bang for your buck if you are bullish and want to lay down a bet that the current market fears are overblown. CF traded as high as $110 in March. If sentiment changes and optimism returns to the market, CF will be a big winner.