LSB Industries , a U.S.-based nitrogen producer, is poised to benefit from the record spreads between low cost U.S. natural gas and higher cost natural gas in Europe and Asia, according to UBS. The bank initiated coverage on the company with a buy rating and $20 price target. That's a more than 30% upside from where shares closed Tuesday. "LSB's plants also are in ideal locations for potential longer-term carbon capture/storage, adding access to blue ammonia (and associated carbon capture credits)," analyst Joshua Spector wrote in a Tuesday note. UBS expects nitrogen prices to remain elevated above historical norms near-term, benefitting free cash flow. While earnings are near a cyclical peak, evaluating them on a normalized basis an on next 12-month free cash flow leaves them undervalued, Spector wrote. Shares of the company are up nearly 38% year to date. There are also opportunities for growth, including in expanding operations and capacity, according to UBS. "LXU's plants are ~30% smaller than competitors that have invested more in capacity expansion, and LXU has invested less in mix improvement opportunities (more storage, derivatives capacity)," said Spector. "We estimate EBITDA could be $30M higher with ~10% expanded capacity and smaller improvement projects, and structurally higher product prices could add another $60M to earnings." The company can also benefit from decarbonization and adding other new revenue streams. UBS expects that about 30% of LSB's gross ammonia capacity could be decarbonized, adding extra income. A carbon capture project with Lapis should add roughly $15 million in annual earnings for the company starting in 2025. "We see the potential for $5M+ in higher EBITDA if low-carbon ammonia earns a premium vs standard grade ammonia," Spector said. —CNBC's Michael Bloom contributed to this report.