Headquartered in Northbrook, Illinois, CF Industries describes itself as the world’s largest ammonia producer. Despite stable cash flows, low debt and aggressive share repurchases, the stock has been sold off along with the rest of the chemicals industry. At $78.40, CF is down by a third from its 2022 record of nearly $120 per share. While management believes that mid-cycle EBITDA can grow 20% by 2030, the Elliott Wave chart below points to more weakness before the bottom is in.
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It reveals that the 50% sell-off from $120 to $60 was a five-wave impulse pattern, marked 1-2-3-4-5 in wave (A), where the five sub-waves of wave 3 are also visible. According to the theory, a three-wave correction follows every impulse, and that’s precisely what the recovery to over $104 looks like. It can be seen as a simple A-B-C zigzag with an expanding triangle correction in wave B, labeled a-b-c-d-e.
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If this count is correct, the third wave of the post-2022 retracement is now in progress. Wave (C) can be expected to drag CF Industries stock below the bottom of wave (A), putting downside targets near $50 on the table. That’ll be a ~35% tumble from the current price level, before the correction is complete and the pre-2022 uptrend can resume. CF Industries looks like a real bargain already. If fundamentals remain intact until then, the stock would be an absolute steal near $50 a share.
