CF Industries (CF) is a stock that’s on my radar. It’s in the Basic Materials sector under Agricultural Inputs. It’s price to earnings ratio is well below the industry average, meaning it’s relatively inexpensive. While it’s revenue and net income growth, along with it’s Return on Equity, is above average.
The stock has spent some time in a $17 trading range between $267 and $250. It broke to the downside at the end of the week, giving into the selling pressure that the broader market succumbed to this week. However this may present a decent buying opportunity for at least a short term bounce.
The daily price chart above shows a couple of potential confluence areas for support at $237.50 and $233. At $237.50 you have matched the size of the January drop and there happens to be a daily swing high there as well. At $233 would then match the $17 trading range starting from the low of the previous trading range. I find these “box” trading ranges to make pretty good measuring sticks for future price movement. There also happens to be a daily swing high there too.
In the end it may all come down to the direction of the overall market. However if your going to be in a stock during a broad market downtrend, it’s usually much less painful to be in one that’s valuation is not absurdly overpriced.