We’re checking out a penny stock that may not be the most exciting but may offer long-term gains. Operating in the nitrogen fertilizer business, we’re looking at CVR Partners (NYSE:UAN). Shares are currently selling for $3.56 USD, on a downward trend in April, and are potentially showing undervalued signals.
Penny Stocks in Fertilizer? Yes, That’s Right
Sometimes, when a company operates in a “boring” sector, you’d be forgiven for thinking it won’t present much in the way of gains. However, it’s often the most mundane businesses that deliver the most necessary things.
Take a funeral home for example—would shares explode on hype? Probably not. But will there be a consistent and concise business that may offer long-term gains? Very plausible. Shares can present very lucrative scenarios when this is the case.
This is one reason CVR Partners shouldn’t be ignored. Engaged in the nitrogen fertilizer business—hardly a sector that everyone is talking about—this penny stock is paying dividends of nearly 8%. For a low-priced stock, that’s quite high, but CVR is a rare circumstance in that its dividends are appropriate.
“CVR Partners may be making the best use of its funds. The company is closer to being like a utility or commodity resource, and I wouldn’t expect to see massive growth. Consistent sales, consistent dividends and consistent operational results … boring, boring, boring.”
When it comes to investing, boring can be a very good thing. There may not be explosive gains, but there seem to be consistent ones.
One thing to note: the company has liabilities running into hundreds of millions. BUT, it has total assets of $1.25 billion, which makes its debt easier to stomach.
Under the Radar
Another reason the CVR penny stock is attractive is that it lies under the radar. Stocks that trade in exciting sectors can be over-priced because they move on hype and seldom on metrics. It’s worth taking that into account when searching for penny stocks. Nobody wants to be the victim of hype, and there’s little chance a fertilizer company will steal the headlines from the quirky CEO that deals in space travel, for example.
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