Shares of Air Products ( APD ) reached a new 52-week high of $139.24 on Nov 18, above its previous high of $137.45. The stock retraced a bit to close the day at $138.90.
The industrial gas giant, which has a market cap of roughly $29.7 billion, has seen its shares jump roughly 27% year-to-date and 29% over a year. Average volume of shares traded over the last three months is around 1,238.7K.
Driving Factors
Air Products' adjusted earnings for fourth-quarter fiscal 2014 (ended Sep 30, 2014), reported on Oct 30, beat the Zacks Consensus Estimate while sales missed. Sales rose in the quarter as a decline in the Tonnage Gases division was more than offset by gains in other businesses. Revenues in the core Merchant Gases segment were driven by higher volumes in key regions and positive pricing in U.S./Canada, Europe and Latin America.
Air Products, a Zacks Rank #3 (Hold) stock, is benefiting from a diverse customer base, cost-reduction measures and sustained pricing power. New business deals and strategic investments are expected to support results in fiscal 2015.
The acquisition of a 67% stake in Chilean industrial gas company, Indura S.A., has ushered in substantial growth opportunity for Air Products. Moreover, the EPCO buyout complements its goal of expanding its portfolio of industrial gases offerings in North America.
Air Products is also keeping a tight control on expenses and undertaking work process improvement initiatives. The company remains on track in delivering on its cost reduction programs, which should support its margins in fiscal 2015.
Air Products is also gaining from incremental opportunities in the liquefied natural gas (LNG) market. The company has been chosen for a major off-shore LNG project in Malaysia, representing a significant opportunity for its LNG offerings. Moreover, the company recently agreed to supply its LNG technology and equipment to Technip for a mid-scale LNG project in Inner Mongolia Province, China. The LNG technology is gaining importance as it meets the increasing global need for cleaner energy.
That said, we account for continued challenges in the company's tonnage gases business. Lower polyurethane intermediates (PUI) volumes and maintenance spending may continue to impact margins in the Tonnage Gases division in the near term.
Other Stocks to Consider
Other companies in the chemical space worth considering include Innospec Inc. ( IOSP ), Celanese Corporation ( CE ) and Kronos Worldwide, Inc. ( KRO ). While Innospec carries a Zacks Rank #1 (Strong Buy), both Celanese and Kronos Worldwide hold a Zacks Rank #2 (Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
