Air Products (APD) touched a new 52-week high of $120 on Feb 25, above its previous high of $119.23. Its shares clocked $119.67 at the end of the trading session on that day.
The industrial gas giant, which has a market cap of roughly $25.3 billion, has seen its shares shoot up roughly 46% over a year. Average volume of shares traded over the last three months is around 1,156.3K.
What's Driving APD Up?
Air Products saw higher profit in first-quarter fiscal 2014 (ended Dec 31, 2013), reported on Jan 28, on its cost reduction initiatives. Earnings for the quarter beat the Zacks Consensus Estimate while sales missed. Decline in the Tonnage Gases division was offset by gains in other businesses. The company reaffirmed its earnings guidance for the full year.
Air Products, a Zacks Rank #3 (Hold) stock, benefits from a diverse customer base, sustained pricing power and cost-reduction measures. New business deals and strategic investments are expected to support results in fiscal 2014.
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 seeing incremental opportunities in the liquefied natural gas (LNG) space. The company has been chosen for a major off-shore LNG project in Malaysia, representing a major opportunity for its LNG technology and equipment. Moreover, it recently agreed to supply technology and equipment for the largest LNG production and exports facility in Russia.
Air Products is also actively engaged in project development activities in its Tonnage Gases division. The company is making significant progress in its hydrogen business and is constructing a new world-scale hydrogen production plant in Canada.
Moreover, Air Products is keeping a tight control on expenses and undertaking work process improvement initiatives. It also remains committed to maximize returns to shareholders.
That said, we account for weakness in the company’s tonnage gases business and higher energy costs that pose a threat to margin expansion.
Other Stocks to Consider
Other companies in the chemical space worth considering are Methanex Corp. (MEOH), Northern Technologies International Corp. (NTIC) and The Dow Chemical Co. (DOW). While both Methanex and Northern Technologies carry a Zacks Rank #1 (Strong Buy), Dow Chemical holds a Zacks Rank #2 (Buy).
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