Top Picks 2018: Praxair (PX)

01/09/2018 5:00 am EST

Focus: INDUSTRIALS

William Selesky

Senior Analyst: Basic Materials, Argus Research Corporation

Praxair Inc. (PX) is a global supplier of industrial gases to diverse users in energy, electronics, medical, food & beverage and manufacturing, with fiscal 2016 revenues $10.5 billion, notes Bill Selesky, analyst with Argus Research.

We view its current operating environment as favorable based on strong global manufacturing trends, which include global industrial production rising at 2.8% through 2020: higher volumes in electronics, metals & manufacturing; and in Asia, new plant start-ups, Chinese project wins and strong end-markets.

We believe that Praxair remains well positioned to deliver stronger EPS growth based on its mix of high-growth businesses, which have generated above-industry-average margins, earnings, and returns on invested capital.

The company has size and scale, operating in 50 countries and servicing 30+ industries. The company’s Linde merger is on track, and we see the new company prioritizing shareholder returns.

In March 2017, Praxair raised its quarterly dividend by 5% to $0.7875 per share, or $3.15 annually, for a yield of about 2.1%. The company has raised its dividend annually for the last 24 years.

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