CF Industries Holdings (NYSE:CF) has been a solid performer this year. Despite the relative weakness in fertilizer pricing, the company continued to deliver strong results, and as a result, its stock is up 13% year to date. Fertilizer prices remain at low levels despite the recent rebound. However, there are several catalysts that could lead to a further lift in CF Industries' shares.

Share repurchase program continues
CF Industries was active in repurchasing its own stock in 2013, buying 7 million shares for a total cost of $1.4 billion. As of Feb. 14, the company had $1.4 billion of repurchase authorization left. CF Industries expects to close the repurchase program in late 2014 or early 2015. Share repurchases decrease the quantity of outstanding stock, thus pushing the earnings-per-share results higher, all other things equal. 

Fertilizer companies like PotashCorp (NYSE:POT) and Mosaic (NYSE:MOS) have also been recently engaged in buying back their shares. These buybacks provided support for both companies' stocks when they were pressured by the fast drop in potash prices. This drop was caused by the decision of Russian potash producer Uralkali to quit its partnership with Belaruskali and proceed with the strategy of volume over price.

Recently, shares of both PotashCorp and Mosaic were on the rise, as there are certain hopes that Uralkali and Belaruskali could restart their partnership.

Phosphate segment sale
CF Industries decided to sell its phosphate operations to Mosaic for $1.4 billion. The company anticipates that the sale will bring $1 billion of after-tax proceeds, further strengthening the balance sheet. The phosphate segment brought CF Industries $148 million in sales in the fourth quarter compared to nearly $1.2 billion in sales generated by its core nitrogen segment.

This sale will help CF Industries to focus on its main nitrogen business as well as fund its capital spending and buybacks. Mosaic will receive additional phosphate production capacity. Phosphate brought 62% of revenue in the fourth quarter for Mosaic, while the remainder of revenue came from its potash business.

CF Industries stated that nitrogen prices bottomed in October. The improving price environment will help the company get favorable terms when it raises an additional $1.5 billion of debt. The company plans to spend $2.5 billion on capital expenditures this year, and it needs money to fund the program.

Although the pricing environment has somewhat improved, it is likely that CF Industries will not be able to fund its capital spending and the buyback program from its operational cash flow. However, these programs will be backed by the sale of the phosphate segment, additional debt, and $1.7 billion of cash on the balance sheet.

Bottom line
CF Industries' capital projects will increase its total nitrogen production capacity by 25%. As the company maintains healthy margins even in a tough price environment, additional capacity will have a positive impact on its cash flow. The capital spending and buyback programs are firmly supported by the sale of the phosphate business and the eventual raising of debt. Despite the stock's recent gains, CF Industries trades at just 12 times its future earnings. All in all, CF Industries looks poised to outperform the market this year.

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