CF Industries (CF) seems to be immune to the kind of ups and downs and recent pressure seen in potash and fertilizer plays. This is because this inorganic fertilizer is benefiting big time from the natural gas boom and demand for corn as a fuel and food source.

Of the nitrogen fertilizer supply, 50% goes to corn and 16% wheat.

Natural gas is burned at high temperatures to turn inert nitrogen into ammonia form which can be absorbed by plants (the process, named after the German scientists who discovered, it is called Haber-Bosch --  they were actually looking for ways to make explosives for war).

Execution has been okay, not amazing, but the company has grown at 31% per year for the past four years and while that’s a tough pace to maintain there are amazing domestic and global opportunities. In fact, while today’s Wall Street Journal points out corporate spending has fallen off a cliff with half of the 40 biggest publicly traded companies announcing plans to curtail capital spending, CF just announced $3.7 billion in capital expenditure spending (investment). Together these initiatives will create 3,400 construction jobs as well as direct and indirect jobs. The direct jobs pay $55,000 to start and $85,000 upon experience and certification.

In the meantime the stock is trading at only a 7 PE and two times book. Even as the last earnings report saw gross margin increase to 52% from 45%.

  • Near term target $230.00
  • Longer term target $260.00

Charles Payne, a FOX Business contributor, is president of Wall Street Strategies. At the time this article was published he, his firm and/or his family did not own shares of CF Industries.

Charles Payne is the host of Making Money with Charles Payne (weekdays 6-7 PM/ET). Click here to see more from Charles Payne.