Praxair Inc.
(PX) is one of the world’s largest suppliers of industrial gases. It produces
atmospheric, process and specialty gases used to enhance performance
applications in the metal fabrication, primary metal, chemical, healthcare,
electronic, glass, pulp, paper and environmental industries. PX has grown its
earnings and dividends at a 13-19% pace annually for the last 10 years and
earns a return on equity well in excess of 20%. While the company is sensitive to economic
factors, it should continue to grow earnings and dividends at an above average
pace over an economic cycle as a result of:
(1) a major
marketing effort expanding its coverage in its operating regions,
(2) an R&D
effort that continuously develops new products and applications,
(3) significant
growth in its end markets,
(4)
acquisitions.
Negatives:
(1) its large international
operations subject it to foreign government regulations, import/export controls
and currency fluctuations,
(2) its major
cost is energy which is subject to price fluctuations,
(3) a highly
competitive industry.
PX is rated A by
Value Line, carries a 55% debt to equity ratio and its stock yields 2.1%.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2004
PX 2.1% 12% 40% 10
Ind Ave 1.7 9 29 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
PX 55% 26% 2 16% A
Ind Ave 32 17 NA 9 NA
Chart
Note:
PX stock made great progress off its November 2008 low, quickly surpassing the
downtrend off its June 2008 high (straight red line) and the November 2008
trading high (green line). Long term it
is in an uptrend (blue lines); intermediate term, it is in a trading range
(purple lines). The wiggly red line is
the 50 day moving average. The Dividend
Growth Portfolio owns a full position in PX.
The upper boundary of its Buy Value Range is $118; the lower boundary of
its Sell Half Range is $166.
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