CF Industries' Shares Fell Nearly 10%. Is the Stock a Buy Now?

Key Points

CF Industries was doing well financially even before the U.S. conflict with Iran.

The company enjoys margin advantages because of its access to U.S. natural gas.

Its shares are still up more than 58% this year.

• 10 stocks we like better than CF Industries ›

Now that shares of CF Industries (NYSE: CF) have been trimmed, it may be a good time to buy the stock and see if the grass is still greener on the other side of the U.S.-Iran conflict for the U.S.-based fertilizer maker.

The stock was briefly down more than 10% on April 8, eventually settling into a more than 5% drop by the end of the day, largely driven by a sharp decline in oil and nitrogen prices following news of a ceasefire between the U.S. and Iran. The ceasefire, ideally, is expected to normalize shipping through the Strait of Hormuz and restore global supply flows.

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CF's shares are still up more than 63% so far this year as of this writing, thanks largely to rising costs for its competitors, who are facing higher natural gas prices overseas. That means that CF, which has easy access to lower-priced natural gas in the U.S., has a steady energy supply and enjoys higher margins.

Here are three reasons why I think the materials stock's recent dip is a buy opportunity for investors:

The company was already doing well financially

CF Industries produces agricultural fertilizers, including ammonia, urea, and ammonium nitrate. It also makes hydrogen and nitrogen products for clean energy and emissions abatement. It closed out 2025 on a strong note, reporting full-year revenue of $7.08 billion, up 19%, and earnings per share (EPS) of $8.97, a rise of 32.6% over 2024. It also enjoyed a gross margin of 38.5%, an improvement of 390 basis points from 2024.

The company rewarded shareholders by repurchasing $1.34 billion in stock in 2025. It has also paid a quarterly dividend for 21 consecutive years, and at its current share price, the yield is around 1.59%. It has increased the dividend by more than 66% over the past five years.

It's important to realize that all that goodfinancial newsoccurred before the current conflict in Iran.

The Strait of Hormuz closures may not be done

Farmers generally order fertilizer for the spring planting season, and CF likely gained market share when its Middle East competitors were blocked from leaving the Persian Gulf. While many farmers prepay, U.S. Agriculture Secretary Brooke Rollins said in late March that approximately 25% of farmers had not yet secured their full fertilizer needs, requiring them to buy from domestic producers at a significant premium. There is plenty of concern that Iran will continue to use the Strait as a bargaining chip, possibly even charging ships tolls.

That, in turn, could continue to both restrain the amount of fertilizer shipped from the Middle East and make it more expensive for fertilizer companies in those countries to sell and deliver their products.

It is seeing strong growth from green energy

CF is rapidly pivoting into higher-margin sectors such as shipping, steel, and power generation, thanks to its green energy initiatives. Ammonia is increasingly viewed as the primary carrier for hydrogen fuel because it is easier to transport and store.

The company operates the only commercial-scale green ammonia plant in North America and has a partnership deal with ExxonMobil for carbon capture projects. The agreement will allow CF to produce up to 1.9 million metric tons of low-carbon ammonia annually. CF Industries also expects to qualify for tax credits for the stored carbon dioxide.

The company's Blue Point low-carbon ammonia joint venture in Ascension Parish, Louisiana, recently broke ground and is expected to be the world's largest low-carbon ammonia production facility by potential capacity. CF is a 40% owner of the project, with the Japanese power company JERA and the Japanese conglomerate Mitsui owning the other stakes.

CF could benefit in the long-term

In the short term, the prevailing view among many is that the company's pricing advantages will revert to what they were before the current hostilities in the Middle East, and that thought is reflected in the stock's slide.

Even if everything returns to how it was before the Strait of Hormuz was closed, which appears unlikely, the effect of the current supply disruptions will likely have a lasting impact as farmers look to steadier sources for their fertilizer needs.

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James Halley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.