Monsanto Company (MON), CF Industries Holdings, Inc. (CF): Some Bang For Your Buck

But both companies have ample growth prospects to offset the shrinkage of margins. CF Industries Holdings, Inc. (NYSE:CF) is currently expanding its nitrogen-fertilizer production facilities in Iowa and Louisiana, which are expected to be fully operational by 2016 and 2015, respectively. The $3.8 billion in expansion projects is expected to boost its overall nitrogen-fertilizer production by 25%, and allow the company to meet rising nitrogen-fertilizer demand for years to come.

For the recent quarter, CF Industries Holdings, Inc. (NYSE:CF) posted an EPS of $7.40 against the estimated $6.94 and $6.66 in last year’s quarter. Although its quarterly revenue of $1.5 billion slid from $1.6 billion in last year’s corresponding quarter, analysts believe that CF Industries’ fair value stock price is $200, which calls for a 9% upside from its current price.

As far as Agrium Inc. (USA) (NYSE:AGU) is concerned, its single-largest stakeholder, Jana Partners (7.5% stake), was pushing the company to spin off a retail division. However, Agrium was able to win the legal battle against Jana Partners last month, which clears the roadblocks in the expansion of its retail network.

As of now, Agrium’s management has yet to make a statement regarding its expansion projects, but I firmly believe that its top brass will announce its plans very soon.

Agrium has cash and cash equivalents of over $1.8 billion with its free cash flow (ttm) of $837 million. That’s a solid liquid position considering that its annual dividend yield of 2.2% entails an annual payout of $299 million, which gets entirely covered by its FCF. Furthermore, the company operates with a modest debt/equity of 57%, with quarterly interest expenses of just $22 million.

Conclusion

In my opinion, all the three mentioned companies seem well poised to deliver high returns over the long run. Although shares of CF Industries Holdings, Inc. (NYSE:CF) and Agrium are down compared to their year-ago prices, investors should consider initiating long positions at low valuations with a systematic investment plan to hedge out the risks and spread the rewards. But if I had to pick one company, it would be Monsanto Company (NYSE:MON) due to its high ROIs, the unlocking of value and a clean record of impressive financial performance.

The article A Good Company With Great Growth Prospects originally appeared on Fool.com and is written by Piyush Arora.

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