Tuesday, October 25, 2011

Praxair (PX) 2011 Review


Praxair Inc (PX) is the world’s second largest supplier 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 11-15% pace annually for the last 10 years and earns a return on equity of approximately 20%. The company suffered both lower volumes and currency difficulties in the recent economic malaise; however, earnings should rebound 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,

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 more debt (47%) than we believe optimal and its stock yields 2.2%.

Statistical Summary


Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2001
PX 2.2% 11% 35% 10
IND 1.7 7 31 NA

Debt/Equity ROE EPS Down Since 2001 Net Margin Value Line Rating
PX 47% 27% 2 15% A
IND 45 17 NA 7 NA


Chart

Note: PX stock made great progress off its March 2009 low, quickly surpassing the down trend off its June 2008 high (red line) and the November 2008 trading high (green line). It is currently in a long term up trend (straight blue lines). Until recently, PS was also in an intermediate term up trend; however, it broke that trend and re-set to an intermediate term trading range (purple lines). The wiggly blue line is on balance volume. The Dividend Growth Portfolio owns a 75% position by virtue of having Sold Half in 2008 and buying back a portion of the shares sold in 2009. Additional shares would be Added at $78; the lower boundary of its Sell Half Range $116.




http://finance.yahoo.com/q?s=PX