Market Overview

CF Industries and Petrohawk Energy to Open Near 52-Week Highs

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As the markets surged again yesterday, CF Industries Holdings (NYSE: CF) and Petrohawk Energy (NYSE: HK) reached new 52-week highs of $166.35 and $38.44 per share, respectively.

CF Industries saw some analysts raise their price targets on the stock following the recent second-quarter earnings report. The company's board also quadrupled its quarterly dividend to $0.40 per share. The Illinois-based chemicals company manufactures and distributes nitrogen and phosphate fertilizer products to agricultural and industrial customers worldwide. CF Industries is an S&P 500 company with a market cap of $11.7 billion.

Its long-term earnings per share growth forecast is 10.9% and its return on equity is 23.6%. The dividend yield is 1.0%. The P/E ratio and the PEG ratio are in line with the industry averages. Shares are trading about 22% higher than at the beginning of the year. In that time, the stock has outperformed competitors Agrium (NYSE: AGU) and Potash (NYSE: POT) as well as the broader markets.

Petrohawk Energy announced in July that it is to be acquired by BHP Billiton (NYSE: BHP) in a deal worth approximately $15 billion. Houston-based Petrohawk has an $11.7 billion market cap and it explores, develops, and produces natural gas properties primarily in Louisiana and Texas. Petrohawk's Haynessville and Eagle Ford assets have done well, and the company recently added assets in the Permian basis.

Petrohawk has a long-term EPS growth forecast of 35.7%. But it also has a P/E ratio and a PEG ratio that are higher than the industry average. Its cash flow from operations has grown in recent quarters. Year to date, shares are trading more than 110% higher. In that time, the stock has outperformed BHP Billiton, as well as competitors such as EOG Resources (NYSE: EOG) and Pioneer Natural Resources (NYSE: PXD).

Action Items:

Bullish: Traders interested in exchange traded funds invested in these companies might want to consider the following trades:

  • Rydex S&P Equal Weight Materials (NYSE: RTM): up almost 9% in the past year
  • First Trust ISE-Revere Natural Gas Index (NYSE: FCG): up about 24% in the past year

Bearish: Or traders might want to consider this alternative positions:

  • Terra Nitrogen (NYSE: TNH): up more than 96% in the past year
  • Chesapeake Energy (NYSE: CHK): up more than 48% in the past year

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Posted-In: 52-Week Highs Agrium CF IndustriesLong Ideas Short Ideas Pre-Market Outlook Trading Ideas ETFs

 

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