The fertilizer industry might be dogged by concerns, but there's one company that looks poised to weather the storm.

CF Industries (NYSE: CF) deals in a nutrient whose prices have been heading north for years, and it comes across as a fundamentally strong company in more than one way. I've picked out three factors that make CF worth a green thumbs-up.

The leader is here to stay
The primary factor working in CF's favor is its business line. CF belongs to an industry that made a fortune in the past few months because of high crop and nutrient prices. Despite reports of higher crop stockpiles surfacing recently, I feel the optimistic long-term story remains intact for CF because it deals primarily in nitrogen.

Crops like corn consume large quantities of nitrogen fertilizer, and I don't think the demand for corn will fall off the cliff anytime soon. It's a staple for human food and livestock feed, and is widely used in ethanol production. Moreover, corn remains a big export crop.

CF derives the highest revenue from nitrogen, unlike peers PotashCorp (NYSE: POT) and Mosaic (NYSE: MOS). They focus more on potash and phosphate, and the demand for these two nutrients hasn't soared as much as it did for nitrogen in the past few years. The two companies are also temporarily cutting down production following softer demand and cautious buyer behavior. CF, fortunately, hasn't come up with any such thing yet, and is actually making efforts to make sure it stays ahead in the race as the largest North American producer of nitrogen -- a position it attained after acquiring control of Terra Nitrogen (NYSE: TNH) last year.

The move that caught my attention
Plans for a greenfield ammonia project might be currently missing from CF's expansion list, but the company is busy increasing its nitrogen capacity in other ways. CF is removing production bottlenecks from the ammonia plants it acquired from Terra last year. This initiative is already in progress at one of its plants, which is expected to add around 100,000 tons of annual capacity once completed.

What interests me more is CF's plan of adding capacity to upgrade larger quantities of ammonia to the highly valued UAN (urea ammonium nitrate). CF recorded 37% and 50% jumps in UAN sales volumes and average selling prices, respectively, during the first nine months of 2011.

In fact, UAN has proved to be one of the most profitable nutrients not just for CF, but for others as well. It has even prompted peer CVR Partners (NYSE: UAN) to upgrade a major chunk of ammonia to UAN (it converted nearly 75% of the ammonia produced in its last quarter). If CF gets down to this, its top line could grow at a faster pace than it is doing now.

The numbers impress
In the past 12 months, CF's revenues clocked a superb 73.7% growth while its bottom line grew by an eye-popping 549%. High nutrient prices and low costs were the key drivers apart from Terra's contribution. Terra churned out a bumper performance throughout last year, with sales surging 42% in the first nine months.

Soaring fertilizer prices proved to be a boon for Terra and hence CF, but CF also enjoyed the added advantage of its natural gas costs slipping to $4.36 per MMBtu (million metric British thermal unit) from $4.54 MMBtu during the first nine months last year. Natural gas is a major input for CF, and its low costs blended perfectly with high prices to take CF's earnings and cash flows to record highs.

Such robust operational performance leaves CF with ample scope to undertake big growth and expansion plans. The company is planning to shell out nearly $1.0 billion to $1.5 billion for capacity additions and upgrades over the next four years. It shouldn't be tough, given that CF is generating higher cash flows than net income and has manageable levels of debt. CF's total debt-to-equity ratio stands at 34.1%. With a strong interest coverage ratio of 23 and cash balances of $1.4 billion (as of Sept. 30), the company can boast solid financials.

The Foolish bottom line
A growing top line, heavy cash balances, reasonable debt, smart growth moves. Can a company give us more reasons to prove it's good? Well, maybe one or two. CF is also a consistent dividend payer (it currently yields 0.9%) and is also buying back shares aggressively.

CF's factories are running full steam, and the rising global need for fertilizers should keep them busy for a long time. Make sure you do not miss out on CF's ambitious plans. Stay updated on all its news and analysis by adding it to our free and personalized stock-tracking service. Click here to add CF to your stock watchlist.

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