This Gaseous Bet Can Bolster Your Portfolio

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

The products this company sells might not be visible, but its strong fourth-quarter numbers are not to be missed. High volumes, high prices, new contracts rolling in -- things seem to be on the right track for industrial gas provider Air Products and Chemicals (NYSE: APD  ) .

After the company recently acquired a 25% stake in a Saudi Arabian business, let's see what else is cooking at Air Products and whether it's worth a place in your stock watchlist.

The numbers
Backed by double-digit sales growth in most segments, Air Products' total revenues grew 11% from the year-ago quarter to $2.6 billion. While higher volumes and demand from emerging markets played a big role in pushing up revenues, pricing had an important part to play, especially in segments such as performance materials.

As a result of strong top-line growth, Air Products' net income went up to $325 million from $294 million a year ago.

Raise those prices
To tackle soaring input costs, Air Products increased prices in various product lines, especially chemicals. Its performance materials section's revenues thus rose in spite of lower volumes.

Air Products is not the only one hiking prices, though. The entire chemical space has been on a price-hiking spree lately. Huntsman (NYSE: HUN  ) , for instance, has been benefiting from frequent price hikes. Ashland (NYSE: ASH  ) also announced fresh increases last month. There are many other similar stories brewing in the chemical industry.

Air Products may boost prices further. Even in relatively weaker markets like Europe, it will continue to push up prices to offset costs. These moves should increase the company's revenues in the forthcoming quarters.

Emerging markets are the winners!
Air Products seems to be making the most from the emerging markets. This region was a big contributor to the company's solid fourth-quarter revenues. And Air Products has kept its investments in these regions rolling.

It has collaborated with a Chinese university on clean energy technology. At the same time, an energy company in China has extended its relationship with Air Products by awarding it with a long-term gas supply contract.

To tap growth opportunities in the electronics industry, Air Products will expand its nitrogen production in Korea by building new plants. The company has plans for similar expansions around the world. Recently, electronics giant Samsung chose Air Products to supply gases for production of its mobile display.

Emerging markets have thus opened up a world of opportunities for Air Products and its peers. Praxair (NYSE: PX  ) , for instance, will be supplying gases to a company in Russia under a 15-year agreement .The company also has new contracts in China and is expanding its base in the fast-growing Indian market.

Strong emerging markets should continue to drive growth for Air Products.

The Foolish bottom line
Air Products' ride on the back of fast-growing markets is great. Moreover, the company has planned a fresh $1 billion buyback program and also raised its dividend for the 29th consecutive year (current dividend yield is good at 2.8%). This is good for investors!

Also, after an unsuccessful bid for rival Airgas (NYSE: ARG  ) , who knows what the company might have next in mind. I suggest you keep an eye on the stock and stay updated on its news and analysis. Click here to add it to your stock watchlist

Neha Chamaria does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1578219, ~/Articles/ArticleHandler.aspx, 10/24/2016 11:48:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 4:00 PM
APD $134.81 Up +0.37 +0.28%
Air Products and C… CAPS Rating: ***
ARG.DL $0.00 Down +0.00 +0.00%
Airgas CAPS Rating: *****
ASH $113.11 Up +1.23 +1.10%
Ashland CAPS Rating: *****
HUN $16.47 Down -0.03 -0.18%
Huntsman CAPS Rating: **
PX $119.56 Down -0.32 -0.27%
Praxair CAPS Rating: ****