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5 Reasons to Add Air Products (APD) Stock to Your Portfolio

Zacks

Air Products and Chemicals, Inc.'s APD stock looks promising at the moment. 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.

Air Products’ shares are up roughly 7.5% over a year, outperforming the industry’s decline of 6.4% over the same time frame.


Let’s take a look into the factors that make this Zacks Rank #1 (Strong Buy) stock a compelling choice for investors right now.

What’s Working in Favor of APD?

Buoyant Outlook: Air Products, during its fiscal third-quarter call, raised its adjusted earnings guidance for fiscal 2018. It now anticipates adjusted earnings to be in the range of $7.40 to $7.45 per share (a 17-18% increase from the prior year), up from its earlier view of $7.25 to $7.40 per share. The company also expects adjusted earnings to be in the band of $1.95 to $2.00 per share for the fiscal fourth quarter, up 11-14% year over year.

Air Products has built a strong project backlog. These projects are anticipated to be accretive to earnings and cash flow over the next few years. It will also benefit from its actions to cut operational costs.

Moreover, strategic investments in high-return projects, new business deals and acquisitions are likely to drive fiscal 2018 results. The company has a capacity to deploy at least $15 billion in high-return investments over the next five years, which will boost shareholders’ value.

Positive Earnings Surprise History: Air Products has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 4.9%.

Estimates Northbound: Annual estimates for Air Products have moved up over the past three months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for fiscal 2018 has increased by around 1.1% to $7.45 per share. The Zacks Consensus Estimate for fiscal 2019 has also moved up 1.2% over the same timeframe to $8.16.

Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for fiscal 2018 for Air Products reflects an expected year-over-year growth of 18.1%. Moreover, earnings are expected to register a 9.6% growth in fiscal 2019. The company also has an expected long-term earnings per share growth of 13.3%, higher than the industry average of 11.7%.

Superior Return on Equity (ROE): Air Products’ ROE of 15.2%, as compared with the industry average of 9.6%, manifests the company’s efficiency in utilizing shareholder’s funds.

Air Products and Chemicals, Inc. Price and Consensus


Air Products and Chemicals, Inc. Price and Consensus | Air Products and Chemicals, Inc. Quote

Other Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Methanex Corporation MEOH, KMG Chemicals, Inc. KMG and Cabot Corporation CBT.

Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #1. The company’s shares have gained around 20% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.

KMG Chemicals has an expected long-term earnings growth rate of 28.5% and sports a Zacks Rank #2 (Buy). The company’s shares are up roughly 23% over the past six months.

Cabot has an expected long-term earnings growth rate of 11% and carries a Zacks Rank #2. The company’s shares have gained around 12% over the past six months.

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