Darren SissonsLinde PLCLINWAITJul 31, 2023

LIN is one of the larger basic materials names in the US. It is a $197B company with a decent yield of 1.3%, a premium valuation of 27X forward earnings, but a strong and growing revenue base of $32.5B. It has decent debt levels, a growing margin, and strong cash flow generation, of which it uses most to repurchase shares. While its shares trade at an expensive valuation, its performance has been excellent, and its fundamentals continue to grow and expand. We would be comfortable owning LIN as part of a long-term position. 

Materials which we think might be in great demand in the future include: lithium and cobalt (lithium-ion batteries for EV and renewable energy storage), graphene (exceptional strength and conductivity), and advanced alloys (aerospace and automotive industries).
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Huge winner so far. Very well run. Not much competition in the space. Not a ton of growth ahead. Price being driven by infrastructure spend in the US. Look elsewhere for better valuations. Could look at on a major pullback.

An earnings winner. Continues to improve margins and generate consistent cash. Buy this and sleep at night.

They reported this morning. Really likes LIN. Take or pay contracts with high returns, so a dividend grower with little cyclicality in this industry.

Largest industrial gas company in the world. Good mix of end markets, some in defensives and some in growth. Usually take-or-pay contracts with commodity cost pass-throughs, ensuring high and stable ROE. 3+ decades of annual dividend growth. Yield is 1.37%.

A growth industrial name in natural gas, the top dog in an oligopic industry.

Has stagnant sales, but earnings growth has been terrific thanks to price increases and essential products that intend to de-carbonize while making better semis and providing oxygen, helium and especially green hydrogen. Just reported a mixed quarter of a top-line miss but bottom-line beat. Strip out variable costs, then underlying sales growth is 6% YOY. 

It has the largest liquid hydrogen capacity and distribution system in the world. Are building a new facility in upstate New York that will double that capacity.

Has acted like a bond proxy over the years with pricing upside. They're expanding their capacity and are exposed to all end markets, like CO2 in fountain drinks and oxygen for hospitals. A core holding that has performed very well for him over years. This rarely dips, but buy when it happens. All the industrial gas companies are European.

Linde consistently beats earnings. In early February, Linde reported their Q4 2022 EPS at $3.16 beating the expected $2.91. Increased prices and greater volumes meant higher revenues, specifically in the Americas which enjoyed a 12% YOY rise in operating profits. Linde also has a $9 billion backlog from clients who span everything from healthcare to making semiconductors and food supplies. One future use will be supplying Taiwan Semiconductor‘s new plant in Arizona; Linde will build a $600-million gas facility. Read: Buying pullbacks: DOL, UNH, Linde for our full analysis.

Largest industrial gas company. 
Recession proof company.
Ability to grow earnings in double digits in past recession.
Diversified revenues (US and Canada).
Large array of clients from food supply to industrial use.
Well positioned to help industrial companies reduce carbon footprint (natural has and carbon capture).
Good investment for long term investors.

It reports Monday. Will increase their exposure to hydrogen in California, which indicates that hydrogen fuel cells have a chance. He expects good numbers next week.