Air Products and Chemicals, Inc. APD stock looks promising at the moment. The industrial gas giant is well-placed for growth on its project investments, productivity actions and new business deals.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to the 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.
Shares of Air Products have moved up 4.3% over a year against the 18.8% decline of its industry. It has also outperformed the S&P 500’s 2.1% rise.
The Zacks Consensus Estimate for fiscal 2020 earnings of $8.48 for Air Products suggests year-over-year growth of 3.3%. Moreover, earnings are expected to register 16.1% growth in the fiscal 2021. The company also has an expected long-term earnings per share growth rate of 8.9%, above the industry average of 7.7%.
Superior Return on Equity (ROE)
Air Products’ ROE of 16.4%, as compared with the industry average of 11.5%, manifests the company’s efficiency in utilizing shareholder’s funds.
Air Products remains focused on maximizing returns to shareholders. Early this year, the company’s board 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.
Growth Drivers in Place
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. The company is also boosting productivity to improve its cost structure. It is seeing the 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 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. The project will likely boost the size and supply capacity of the company’s extensive hydrogen pipeline system in the Gulf Coast.
The company also recently completed the buyout of five steam methane reformer hydrogen production plants for $530 million from PBF Energy. The PBF deal is expected to be accretive to the company’s bottom line in fiscal 2020. Air Products also expects to complete the $12 billion Jazan gasification project in Saudi Arabia by October 2020.
Air Products has a total available capacity to deploy (over fiscal 2018-2022) around $18 billion in high-return investments, aimed at creating significant shareholder value. It has already spent or committed roughly 65% of this capacity.
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
Some other top-ranked stocks in the basic materials space include Agnico Eagle Mines Limited AEM, Harmony Gold Mining Company Limited HMY and AngloGold Ashanti Limited AU.
Agnico Eagle has a projected earnings growth rate of 53.6% for the current year. The company’s shares have rallied roughly 24% in a year. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Harmony Gold has an expected earnings growth rate of 28.6% for the current year. The company’s shares have popped 87% in the past year. It presently carries a Zacks Rank #2.
AngloGold has a projected earnings growth rate of 109.9% for the current year. The company’s shares have surged around 71% in a year. It currently has a Zacks Rank #2.
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