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Airgas Hits 52-Week High

Zacks Equity Research

Shares of Airgas, Inc. (NYSE:ARG) attained a new 52-week high of $112.71, on Jan 17 eventually closing at $112.15. This was an all-time high for the Radnor, Pa.-based industrial, medical and specialty gases, and hardgoods supplier.

Airgas has a market cap of $8.3 billion and long-term expected earnings growth of 12%. The stock has delivered a one-year return of about 22.3%. Average volume of shares traded over the last three months stood at approximately 354K. Over the past 52 weeks Airgas has ranged from a 52-week low of $88.60 on Jan 24, 2013 to the 52 week high of $112.71 on Jan 17.

Growth Drivers

Shares of Airgas started escalating following the strong fiscal second-quarter results on Oct 23. Airgas’ earnings increased 19% year over year to $1.25 a share in the quarter. Revenues in the reported quarter grew 4% year over year to $1.28 billion. Acquisitions aided sales growth by 2%, with organic sales up 2% and a 4% increase in gas and rent, but were partially offset by a 2% decline in hardgoods.

Airgas expects adjusted earnings per share for the third quarter of fiscal 2014 to increase 11%–15% year over year to $1.15–$1.20. For fiscal 2014, Airgas expects earnings in the range of $4.85–$5.00, reflecting 11%–15% annual growth.

Airgas is expected to benefit from its strong acquisition pipeline. The company has a target of acquisitions worth total sales of $150 million in fiscal 2014. Furthermore, Airgas’ SAP implementation will help deliver over $75 million in annual run-rate operating income benefits.

Non-residential (energy & infrastructure) construction sector accounts for 14% of Airgas’ sales. The company is seeing signs of a probable improvement in non-residential construction activity next year. Order flow has started for a couple of large projects and a number of rumored large projects have now moved into planning and permitting stages. Airgas will benefit if it can win these projects.

Share price received a boost after Airgas announced one Dec 20 that its operating units will increase the prices on helium by 20%. This increase is for countering the rising costs of obtaining and distributing the gas.

Other Stocks to Consider

Currently, Airgas carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry are L'Air Liquide SA (OTC:AIQUY), Johnson Matthey plc (OTC:JMPLY) and Compass Minerals International Inc. (NYSE:CMP). While L'Air Liquide SA and Johnson Matthey boast a Zacks Rank #1 (Strong Buy), Compass Minerals holds a Zacks Rank #2 (Buy).

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Read the Full Research Report on AIQUY
Read the Full Research Report on CMP
Read the Full Research Report on JMPLY

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