Rentech Nitrogen Partners Hits a New High

Shares of Rentech Nitrogen Partners (NYS: RNF) hit a new high on Friday. Let's look at how it got here and whether clear skies are ahead.

How it got here
Investors were applauding a $1.06 cash distribution announcement from the company on Friday, pushing shares higher. If the distribution level stays that high, the stock would be yielding 14.5% -- an incredibly high level.

Management said that product deliveries were higher in March than expected because of favorable weather conditions, which have pushed up the farming season this year. The company expects to end the fiscal year with $2.34 per share in cash on hand.

Nitrogen fertilizer stocks have had a good run since the company hit the public market, separating itself from its old parent Rentech (ASE: RTK) . Since then the stock has kept up with competitors CVR Partners (NYS: UAN) and Terra Nitrogen (NYS: TNH) as the market has pushed these stocks higher.

RNF Chart

RNF data by YCharts.

An early planting season and a lack of flooding this year have helped conditions, which should lead to a strong year for earnings. But this is just one year and weather patterns can change quickly next year, so high distribution levels aren't guaranteed.

What's next?
Rentech hasn't been public long enough to have a long track record with earnings or distributions, so it's hard to identify a trend. Last quarter, the company only reached half of its expected earnings per share, a big disappointment for investors. The next quarterly result will be released in early May and should give us a better idea of where the business is headed.

I think the stock can continue its run because of the high level of distributions and a strong year for farming. The CAPS community has its doubts, though, giving the stock a two-star rating (out of five).

Interested in reading more about Rentech Nitrogen Partners? Click here to add it to My Watchlist, which will find all of our Foolish analysis on this stock.

At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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