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Highlights
- Basic industry companies manufacture products used in other industries as raw materials for producing other goods.
- CVR Partners, LP (NYSE:UAN) has a P/E ratio of 3,177.48. Its dividend yield is 4.95%.
- LSB Industries, Inc.’s (NYSE:LXU) net sales jumped 39% YoY to US$366 million in the nine months ended September 30, 2021.
Basic industry companies are those that manufacture products used in other industries as raw materials for producing other goods. Industrial specialties, iron and steel, chemicals are such products that are used by different sectors for further production of goods.
These companies thrive when the economy is strong as many products are used in construction. But here we discuss two companies that generated more than a 200% return in one year. Their products are mainly used in agriculture, where demand for the product is comparatively constant.
CVR Partners, LP (NYSE:UAN)
Sugar Land, Texas-based CVR Partners LP, was formed in 2011. It produces and supplies nitrogen fertilizer products for farmers to enhance their farm yield and crop quality. Its primary products are Urea Ammonium Nitrate (UAN) and ammonia.
The UAN products are used for agriculture purposes, and ammonia products are mainly for industrial and agriculture customers, both. The company sells all of its products on a wholesale basis.
The agriculture chemical company has a market capitalization of US$1 billion with a P/E ratio of 3,177.48. Its current dividend yield is 4.95%, and its annualized dividend is US$11.72.
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The company posted net sales of US$343.7 million in the nine months ended September 30, 2021, compared to US$259.6 million a year ago in the same period. Its net income was US$16.67 million or US$1.56 per share diluted compared to the net loss of US$81.3 million or US$7.22 per share diluted in the nine months in 2020.
CVR Partners’ cash and cash equivalents increased significantly to US$100.7 million as of September 30, 2021, from US$30.6 million as of December 31, 2020.
The UAN stock’s price touched a highest of US$91.00 and lowest of US$14.70 in the last 52 weeks and closed at US$93.99 on January 13.
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LSB Industries, Inc. (NYSE:LXU)
LSB Industries manufactures and sells chemical products for agricultural, industrial, and mining purposes. Its products include ammonia, UAN, fertilizer grade AN for agricultural purposes and sulfuric acid, commercial-grade ammonia, nitric acid, carbon dioxide, and diesel exhaust fluid for industrial purposes. The Oklahoma-based company sells its products through distributors as well as directly to customers.
It has a market capitalization of US$956 million. The stock of LSB industries traded between US$11.63 and US$2.50 in one year and closed at US$10.87 on January 13.
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For the nine months ended September 30, 2021, the company reported net sales of US$366 million, a 39% increase YoY compared to US$262 million in the comparable nine months a year ago. Its net income came in at US$1.46 million with 104% growth YoY, compared to net loss of US$40.2 million in the nine months ended September 30, 2020.
Its cash and cash equivalent were US$32.9 million as of September 30, 2021, compared to US$16.26 million at the end of December 31, 2021.
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Bottom line
This sector is affected by ups and downs in the economy because of the fluctuating demand from other industries. Hence, one must always analyze the company as well as economic factors before deciding to invest in these stocks.
