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What Makes Air Products' (APD) Stock a Solid Choice Right Now

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Air Products and Chemicals, Inc.’s (APD - Free Report) stock looks promising at the moment. The industrial gases giant is well placed for growth on the back of its project investments, new business deals and acquisitions.

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.

Let's see what makes this Zacks Rank #2 (Buy) stock a compelling investment option at the moment.

Price Performance

Air Products has outperformed the industry it belongs to over a year. The company’s shares have rallied 45.1% compared with 23.2% decline recorded by the industry.



 

Upbeat Outlook

The company expects adjusted earnings for fiscal 2020 in the range of $9.35-$9.60 per share. This calls for a 14-17% rise year over year. It also sees adjusted earnings per share for first-quarter fiscal 2020 in the band of $2.05-$2.10, which indicates 10-13% rise year over year.

Estimates Northbound

Earnings estimate revisions have the greatest impact on stock prices. Estimates for fiscal 2020 for Air Products have moved up over the past three months. Over this period, the Zacks Consensus Estimate for the year has increased 1.2%.

Healthy Growth Prospects

Growth prospects for Air Products look encouraging. The Zacks Consensus Estimate for earnings for fiscal 2020 of $9.48 for Air Products reflects an expected year-over-year growth of 15.5%. Moreover, earnings are expected to register a 11.8% growth in the fiscal first quarter. The company also has an expected long-term earnings per share growth of 12.3%, above the industry average of 10.2%.

Shareholder Returns

Air Products remains focused on maximizing returns to shareholders leveraging strong cash flow. It generated roughly $2.7 billion of distributable cash flow during fiscal 2019. This marks an increase of nearly 20% from fiscal 2018 levels. This distributable cash flow enabled it to pay roughly $1 billion or around 40% as dividends to shareholders.

Growth Drivers in Place

Air Products’ productivity actions, investments in high-return projects and new project wins should drive its fiscal 2020 results. The company is 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.

Air Products is also poised for growth on the back of its project investments. The company expects the Jazan gas and power project in Saudi Arabia to contribute to the growth in its adjusted earnings per share in fiscal 2020. The Lu'An syngas project in China is also contributing to the results in the company’s Industrial Gases – Asia segment.

The company has a total available capacity to deploy (over fiscal 2018-2022) nearly $18 billion in high-return investments, aimed at creating significant shareholder value. It has already spent or committed more than half of this capacity.

Other Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Daqo New Energy Corp. (DQ - Free Report) , Pan American Silver Corp. (PAAS - Free Report) and Sibanye Gold Limited .  

Daqo New Energy has projected earnings growth rate of 294.7% for 2020 and sports a Zacks Rank #1 (Strong Buy). The company’s shares have rallied roughly 102% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pan American Silver has estimated earnings growth rate of 38.1% for 2020 and carries a Zacks Rank #1. The company’s shares have shot up roughly 49% in a year’s time.

Sibanye Gold has projected earnings growth rate of 587.5% for 2020 and carries a Zacks Rank #2. The company’s shares have surged around 232% over a year.

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