Industrial gas producer and supplier Praxair Inc. (PX - Free Report) recently announced that it has entered into a long-term agreement for supplying industrial gases to Hyundai Oilbank, one of the leading oil refineries in South Korea. Financial terms of the deal have been kept under wraps.
As revealed, Praxair plans to build and operate four vacuum pressure swing adsorption plants. The combined oxygen producing capacity of these plants is estimated to be 750 tons per day. The company anticipates the new plants to start production in 2017. The output of these plants will be used to satisfy oxygen demand of Hyundai, located on the west coast of the Korean peninsula.
The Hyundai Oilbank supply contract will enable Praxair suitably cater to the growing demand for oxygen in the oil refinery industry as well as support its deeper penetration into the South Korean markets.
We believe that the increasing applications of industrial gases in manufacturing, transportation, healthcare, food and beverages, and metal fabrication industries is a boon for industrial gas producers like Praxair. The company had a solid backlog of $1.3 billion at the end of second-quarter 2016.
However, despite bright prospects, certain near-term headwinds continue to weigh on Praxair’s performance. The stock currently carries a Zacks Rank #3 (Hold) and has a market capitalization of $33.2 billion.
Stocks to Consider
Better-ranked stocks in the chemical industry include Innophos Holdings Inc. (IPHS - Free Report) , Innospec Inc. (IOSP - Free Report) and Mitsubishi Chemical Holdings Corporation (MTLHY - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Innophos Holdings reported better-than-expected results in the last two quarters as well as witnessed upward earnings estimate revisions for 2016 over the past 60 days.
Innospec Inc. has a solid earnings surprise history, with last four quarter average positive surprise of 15.15%. Also, the company has witnessed positive revisions in earnings estimates for 2016 and 2017 over the last 60 days.
Mitsubishi Chemical Holdings has witnessed positive revisions in earnings estimates for fiscal 2017 and 2018 over the past 60 days.
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