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Here's Why You Should Add Linde (LIN) to Your Portfolio Now

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Linde plc’s (LIN - Free Report) favorable financial position, strong fundamentals and upbeat growth estimates make it a solid investment option. Also, its efforts to improve its position in the clean hydrogen space bode well.

Let’s analyze the factors that make this currently Zacks Rank #2 (Buy) stock an ideal investment bet. Also, it has a VGM Score of B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings Growth Estimates

The Zacks Consensus Estimate for 2021 earnings per share and revenues is pegged at $10.07 and $29.4 billion each, indicating a respective 22.36% and 7.89% improvement from the corresponding year-ago reported figures. Also, the Zacks Consensus Estimate for 2022 earnings per share and revenues stands at $11.19 and $31 billion, respectively, each implying an 11.05% and a 5.29% improvement from the corresponding prior-year reported numbers.

Moreover, the long term (three-five years) earnings growth rate is pegged at 11%.

Backlog

The project backlog is one indicator of future sales growth. Linde has sale-of-gas backlog of $3.5 billion at present. In its engineering segment, it had contractually secured a backlog of $4,323 million.

Surprise History

The company’s trailing four-quarter earnings surprise is 10.49%, on average.

Strategic Efforts

In the first three months of 2021, Linde invested $762 million and expects to spend in the range of $3-$3.4 billion for the full year. In February, it started two air-separation units (ASUs) to supply gaseous oxygen and nitrogen to the Wanhua Chemical Group. These plants along with two existing ASUs will support the phase I and II of Wanhua Chemical's integrated chemical site and production center in Yantai besides expanding the company’s presence in Asia.

Moreover, it is making efforts in enhancing its footprint in the clean hydrogen space. In addition, its existing capability in the clean hydrogen value chain will allow it to benefit from rising demand for clean hydrogen on a global scale.

Financial Position

Linde’s debt-to-capital is 24.85% compared with the industry’s 41.48% average. As of Mar 31, 2021, cash and cash equivalents were $4,096 million, up from $3,754million as of Dec 31, 2020. Operating cash flow of the company at the end of the first quarter was $2,109 million compared with $1,347 million in the comparable period in 2020.

Shareholder Rewards

The company with approval of its board of directors announced a dividend of $1.06 per share in January, which marks a 10% increase. Following this hike, its new annualized dividend amounted to $4.24 per share. It has been raising its dividend amount since 2018. Moreover, it approved a $5-billion worth stock repurchase program, which will help the company buy back up to 15% of outstanding shares from Feb 1, 2021 through Jul 31, 2023. During the March quarter, it returned $1,404 million to its shareholders through dividends and repurchases, net of issuance.

Return on Equity (ROE)

The company’s ROE for the trailing 12 months is 9.66%, comparing favorably with its industry’s 5.96%. This uptrend reflects its efficiency in utilizing its shareholders’ funds.

Stock Outperformance

The stock has rallied 21.6%, outperforming the industry’s rise of 18.7% in the past three months.

Three Months Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

Other Stocks to Consider

A few other top-ranked stocks in the same sector are Canadian Natural Resources Limited (CNQ - Free Report) , Imperial Oil Limited (IMO - Free Report) and Suncor Energy (SU - Free Report) , all flaunting a Zacks Rank of 1, presently.

Canadian Natural Resources delivered an earnings surprise of 134.2%, on average, in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has moved 16.8% north in the past 60 days.

Imperial Oil delivered a surprise of 16.7%, on average, in the last four quarters. The Zacks Consensus Estimate for 2021 earnings has moved 5.2% north in the past 60 days.

Suncor Energy has a long-term (three-five years) earnings growth rate of 3%. The company delivered an earnings surprise of 69.5%, on average, in the trailing four quarters.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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