4. Air Products and Chemicals, Inc. (NYSE:APD)
Number of Hedge Fund Holders: 43
Air Products and Chemicals, Inc. (NYSE:APD) is a Pennsylvania-based provider of atmospheric gasses, process and specialty gasses, and relevant equipment and services worldwide. The company serves multiple industries, including refining, chemical, gasification, metals, manufacturing, food and beverage, electronics, magnetic resonance imaging, and energy production and refining. Air Products and Chemicals, Inc. (NYSE:APD) is one of the premier chemical stocks to invest in.
On November 3, Air Products and Chemicals, Inc. (NYSE:APD) issued guidance for FY 2023 adjusted earnings of $11.20-$11.50 per share, representing a growth of 9% to 12% over FY 2022, and Q1 adjusted EPS of $2.60-$2.80, which is 5%-13% higher than the prior-year quarter.
BofA analyst Steve Byrne on November 7 raised the price target on Air Products and Chemicals, Inc. (NYSE:APD) to $308 from $281 and kept a Neutral rating on the shares. Air Products and Chemicals, Inc. (NYSE:APD)’s EPS outperformed consensus estimates, and the company offered EPS guidance of $2.68-$2.88, mainly supported by higher volumes, pricing, and equity affiliate income counteracting increased costs and forex headwinds, the analyst told investors in a research note. The analyst said that mobility remains a primary long-term growth catalyst, and he forecasts low-teens earnings growth in FY23.
According to Insider Monkey’s third quarter database, 43 hedge funds were bullish on Air Products and Chemicals, Inc. (NYSE:APD), compared to 33 funds in the preceding quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is a prominent position holder in the company, with 225,940 shares worth $52.5 million.
Here is what Madison Funds specifically said about Air Products and Chemicals, Inc. (NYSE:APD) in its Q2 2022 investor letter:
“This quarter we are highlighting Air Products and Chemicals, Inc. (NYSE:APD) as a relative yield example in the Materials sector. APD is a leading global industrial gas supply company and is the largest supplier of hydrogen and helium in the world. It has a sustainable competitive advantage due to long-term customer relationships and contracts, high customer switching costs, and the mission critical nature of its products. Industrial gasses are a relatively small fraction of customers’ overall costs but are crucial to ensure uninterrupted production.
Our thesis on APD is that it appears well-positioned for consistent double-digit growth due to a large multi-year capital allocation plan, and the need for accelerating capital expenditures by its customers. It has a $25 billion backlog driven by traditional gas investments along with new growth opportunities like gasification, green hydrogen, and carbon capture. APD’s gasification technologies help improve energy efficiency and independence, which is a key focus for its customers. The company also has a strong management team with a record of expanding margins and exemplary capital allocation.
The fund purchased APD in June 2022 at $260. At the time of purchase, APD had a dividend yield of 2.6% and a relative dividend yield of 1.6x the S&P 500, which was near the high end of its historical range. The chart below shows the long-term dividend yield and relative dividend yield of the stock. The company has an A-rated balance sheet by Standard & Poor’s and is a Dividend Aristocrat that has raised its annual dividend 40 years in a row. Over the past five years, APD has increased its dividend an average of 11.5% per year. We expect similar dividend increases in the future which would help grow income and protect against the impact of inflation…” (Click here to read full text)
