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Why You Should Retain Air Products (APD) in Your Portfolio
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Air Products and Chemicals, Inc. (APD - Free Report) is expected to gain from its productivity actions, project investments and new business deals.
Shares of this industrial gases giant are down 17.5% year to date compared with the 40.8% decline of its industry.
Let’s delve deeper to find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
Driving Factors
Air Products’ productivity actions, investments in high-return projects and new project wins are expected to drive its fiscal 2020 results. New projects are contributing to its volume growth as witnessed in the last reported quarter. The company is also boosting productivity to improve its cost structure. It is seeing positive impact of its productivity actions and is expected to benefit from additional productivity and cost improvement programs in fiscal 2020.
The company is also poised for growth on the back of its project investments. Notably, the company’s latest project in the United States, which is worth $500 million, showcases its core strengths and capabilities for supplying nitrogen from an air separation unit and hydrogen from a steam methane reformer. This marks Air Products' largest investment so far in the United States. The project will likely boost the size and supply capacity of the company’s extensive hydrogen pipeline system in the Gulf Coast.
Air Products has a total available capacity to deploy (over fiscal 2018-2022) more than $18 billion in high-return investments, aimed at creating significant shareholder value. It has already spent or committed more than half of this capacity.
Moreover, Air Products remains focused on maximizing returns to shareholders. The company’s board, earlier this year, increased its quarterly dividend by more than 15% to $1.34 per share from $1.16, marking the largest dividend hike in its history. This also marks the 38th straight year of a dividend increase.
A Few Headwinds
Air Products faces challenges from higher expected maintenance spending in the second-quarter of fiscal 2020. It expects higher maintenance costs for the quarter due to planned life extension work on certain facilities. Higher costs may affect margins in its Industrial Gases — Americas segment.
Moreover, the company’s Industrial Gases — Asia segment faces headwind in the fiscal second quarter from the Chinese Lunar New Year holiday which was extended by Beijing to contain the outbreak of coronavirus. The company expects slowdown due to the Chinese New Year to impact growth in the second quarter. This is likely to affect sales and margins in Air Products’ Asia business.
Air Products and Chemicals, Inc. Price and Consensus
Better-ranked stocks worth considering in the basic materials space are The Scotts Miracle-Gro Company (SMG - Free Report) , NovaGold Resources Inc. (NG - Free Report) and Newmont Corporation (NEM - Free Report) .
Scotts Miracle-Gro has an expected earnings growth rate of 15.4% for the current fiscal year. The company’s shares have gained roughly 26% in the past year. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NovaGold has a projected earnings growth rate of 11.1% for the current year. It currently carries a Zacks Rank #2. The company’s shares have surged roughly 100% in a year.
Newmont has a projected earnings growth rate of 90.2% for the current year. The company’s shares have rallied around 37% in a year. It currently has a Zacks Rank #2.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Why You Should Retain Air Products (APD) in Your Portfolio
Air Products and Chemicals, Inc. (APD - Free Report) is expected to gain from its productivity actions, project investments and new business deals.
Shares of this industrial gases giant are down 17.5% year to date compared with the 40.8% decline of its industry.
Let’s delve deeper to find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
Driving Factors
Air Products’ productivity actions, investments in high-return projects and new project wins are expected to drive its fiscal 2020 results. New projects are contributing to its volume growth as witnessed in the last reported quarter. The company is also boosting productivity to improve its cost structure. It is seeing positive impact of its productivity actions and is expected to benefit from additional productivity and cost improvement programs in fiscal 2020.
The company is also poised for growth on the back of its project investments. Notably, the company’s latest project in the United States, which is worth $500 million, showcases its core strengths and capabilities for supplying nitrogen from an air separation unit and hydrogen from a steam methane reformer. This marks Air Products' largest investment so far in the United States. The project will likely boost the size and supply capacity of the company’s extensive hydrogen pipeline system in the Gulf Coast.
Air Products has a total available capacity to deploy (over fiscal 2018-2022) more than $18 billion in high-return investments, aimed at creating significant shareholder value. It has already spent or committed more than half of this capacity.
Moreover, Air Products remains focused on maximizing returns to shareholders. The company’s board, earlier this year, increased its quarterly dividend by more than 15% to $1.34 per share from $1.16, marking the largest dividend hike in its history. This also marks the 38th straight year of a dividend increase.
A Few Headwinds
Air Products faces challenges from higher expected maintenance spending in the second-quarter of fiscal 2020. It expects higher maintenance costs for the quarter due to planned life extension work on certain facilities. Higher costs may affect margins in its Industrial Gases — Americas segment.
Moreover, the company’s Industrial Gases — Asia segment faces headwind in the fiscal second quarter from the Chinese Lunar New Year holiday which was extended by Beijing to contain the outbreak of coronavirus. The company expects slowdown due to the Chinese New Year to impact growth in the second quarter. This is likely to affect sales and margins in Air Products’ Asia business.
Air Products and Chemicals, Inc. Price and Consensus
Air Products and Chemicals, Inc. price-consensus-chart | Air Products and Chemicals, Inc. Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space are The Scotts Miracle-Gro Company (SMG - Free Report) , NovaGold Resources Inc. (NG - Free Report) and Newmont Corporation (NEM - Free Report) .
Scotts Miracle-Gro has an expected earnings growth rate of 15.4% for the current fiscal year. The company’s shares have gained roughly 26% in the past year. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NovaGold has a projected earnings growth rate of 11.1% for the current year. It currently carries a Zacks Rank #2. The company’s shares have surged roughly 100% in a year.
Newmont has a projected earnings growth rate of 90.2% for the current year. The company’s shares have rallied around 37% in a year. It currently has a Zacks Rank #2.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>