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5 Reasons to Add Air Products (APD) to Your Portfolio Now

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Air Products and Chemicals, Inc.'s (APD - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

Air Products, a Zacks Rank #2 (Buy) stock, has outperformed the industry it belongs to over a year. The company’s shares have gained around 12.8% over this period, compared with roughly 8% growth recorded by the industry.


Let’s take a look into the factors that make this industrial gas giant an attractive investment option.

What's Working in Favor of APD?

Strong Q3 & Upbeat Outlook: Air Products saw its profits surge nearly five-fold year over year to $473.9 million or $2.15 per share in third-quarter fiscal 2018. Adjusted earnings of $1.95 per share outstripped the Zacks Consensus Estimate of $1.84.

Air Products raised its adjusted earnings guidance for fiscal 2018. It now anticipates adjusted earnings to be in the range of $7.40 to $7.45 per share (a 17-18% increase from the prior year), up from its earlier view of $7.25 to $7.40 per share. The company also expects adjusted earnings to be in the band of $1.95 to $2.00 per share for the fiscal fourth quarter, up 11-14% year over year.

Air Products has built a strong project backlog. These projects are anticipated to be accretive to earnings and cash flow over the next few years. It will also benefit from its actions to cut operational costs. Moreover, strategic investments in high-return projects, new business deals and acquisitions are likely to drive fiscal 2018 results. The company has a capacity to deploy at least $15 billion in high-return investments over the next five years, which will boost shareholders’ value.

Positive Earnings Surprise History: Air Products has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 4.9%.

Estimates Northbound: Annual estimates for Air Products have moved north over the past month, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for fiscal 2018 has increased by around 0.9% to $7.44 per share. The Zacks Consensus Estimate for fiscal 2019 has also moved up 1% over the same timeframe to $8.14.

Superior Return on Equity (ROE): Air Products’ ROE of 15.2%, as compared with the industry average of 9.9%, manifests the company’s efficiency in utilizing shareholder’s funds.

Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for fiscal 2018 for Air Products is currently pegged at $7.44, reflecting an expected year-over-year growth of 17.9%. Moreover, earnings are expected to register a 9.5% growth in fiscal 2019. The company also has an expected long-term earnings per share growth of 16.2%, higher than the industry average of 11.3%.

Other Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Ingevity Corporation (NGVT - Free Report) , Huntsman Corporation (HUN - Free Report) and Celanese Corporation (CE - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has an expected long-term earnings growth rate of 12%. The company’s shares have rallied around 74% in a year.

Huntsman has an expected long-term earnings growth rate of 8.5%. The company’s shares have rallied around 23% in a year.

Celanese has an expected long-term earnings growth rate of 10%. Its shares have shot up roughly 19% over a year.

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