The S&P 500's biggest gainer since the Iran conflict started is not an oil stock

By Tomi Kilgore

Prices of urea fertilizer, of which the Middle East is a major exporter, have increased more than crude oil since the Iran conflict started

CF Industries shares have been the S&P 500's biggest gainers since the Iran conflict began, as fertilizer prices have climbed more than oil-futures prices.

While the surge in crude oil prices may be the focus of Wall Street as the Iran conflict continues to rage, there are other commodities that have rallied even more, enough to catapult this under-the-radar company's stock to the top of the S&P 500 index's best-performers list.

Shares of CF Industries Holdings (CF) have run up 20.7% this month to make it the S&P 500's SPX No. 1 stock in March. The main reason for the rally? The company makes fertilizer. And according to RBC Capital analyst Andrew Wong, the Middle East accounts for about 35% to 40% of all urea fertilizer exports, which is more than the percentage of the world's crude exports that come from the region.

Meanwhile, the S&P 500 has lost 1.5% in March, while the State Street SPDR S&P Oil & Gas Exploration & Production ETF XOP has gained 7.1%.

Urea prices have hiked up about 35% since the Iran conflict started, while crude oil futures (CL.1) have climbed about 32%.

The Middle East also produces nearly a fifth of the world's liquid natural gas, which is an essential raw material used to produce nitrogen fertilizer. So, as Wong noted, rising LNG prices have raised the costs to produce nitrogen fertilizer, which also benefits CF Industries.

Also read: Only about 8 ships a day are passing through the Strait of Hormuz - 94% fewer than usual.

Mizuho's John Roberts said there's more to the strength in CF's stock than just the rise in fertilizer pricing and crude oil. He believes the stock is benefiting from the "anti-AI HALO" trade.

HALO refers to hard assets, low obsolescence. Basically, Roberts said the company is shielded from the disruption that artificial intelligence has caused in many other parts of the market, such as software, financial technology and IT consulting.

To call CF an under-the-radar company may be an understatement. The average daily trading volume in the stock over the past 90 days is about 2.6 million shares, which is less than half the daily average volume of all the S&P 500's components. And the company's market capitalization of $18.12 billion makes it only the 409th most-valuable S&P 500 company.

Among other fertilizer producers, shares of CVR Partners (UAN) have rallied 29.3%, LSB Industries shares (LXU) have advanced 16.2%, Mosaic's stock (MOS) has gained 4.7% and Nutrien's stock (NTR) has tacked on 5.7%.

-Tomi Kilgore

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03-11-26 1703ET