Praxair Inc (PX-N)

(A Top Pick Sep 6/17, Up 27%) They are still making progress on a recent acquisition. It is a high quality business that can continue to invest as they are smart allocators of capital. The barriers of entry are very high.

(A Top Pick December 27, 2017. Down 2.09%). It’s currently in a bit of a limbo period, waiting for regulatory approval of a large acquisition (they bought The Linde Group, which is a peer of Praxair) to close. Praxair is a very good operator but the industrial gases business raises monopoly concerns, so the regulator will have make decisions about which businesses Praxair will have to divest. He expects the business to do well after the regulatory decisions are made. [Note: There was no table for this stock at the end of the end of the segment to show whether he owns this stock or not.)

He likes the management and they are in the processes of a major acquisition and will need to divest some of the assets. Organic growth is picking up. Not a cheap stock, but it is reasonable. (Analysts’ price target is $175).

A great company, and is in industrial gases. They sell internationally, but a large portion of their sales is in the US. It's a beneficiary of a strengthening economy. There could be some bumps later in the year, but he thinks it could come from higher prices.

A GDP global growth type of stock. It goes as industrials go and goes with GDP. A recession could happen in 2 to 3 years, so you could probably hold this for 18 months to 2 years. He would continue to hold as long as you continue to see strong economic numbers globally.

Industrials tend to move well until the spring, seasonally. The market looks good, and industrials have been dragged along with it. On a long basis, 2014-2017, it formed a cup and handle, and has broken out. It’s gone fairly parabolic with a steep looking trend line. That leaves it vulnerable to a correction. The breakout, though the lid that was contained since 2014, seems to have disintegrated. To him, technically it is very bullish. It might pull back as it is probably overbought, but is not a bad looking chart, especially if you can buy it on a bit of a pullback.

Industrial gas business. They manufacture and distribute industrial gases. In the mists of regulatory approval for merger with Linde AG a big European peer. Looking at applying their best in class operational expertise to their new acquired target. Will gain visibility in the acquisition as we move through 2018. And then 2019 really turns into an integration year where we start to see the benefits of the combined entity. They’ve owned this through this year, but they would still buy it today given the attractiveness they see from the acquisition. (Analysts' Price target $163.50.)

Industrial gases. Just agreed to a merger. Not an overly exciting company, but it is a consistently high-quality business. By buying Linde it gives them greater scale and there is a lot of cost savings potential and synergies. Over time, this can do well. It isn’t a “get rich overnight” stock, it is a steady compounder. He likes how they think. Dividend yield of 2.4%. (Analysts’ price target is $140.)

As a long-term investment? A producer of industrial gases is highly dependent on industrial cyclicals, which have had some troubles. They are related to the energy sector. What troubles him is that its multiples have been stubbornly high, at about 20X earnings in a depressed market. There are better places to look.

Likes this business long-term and they are a big player. He would have no problem owning it here if you are a long-term player.

Near historical highs. Insiders have sold a lot recently. Book value is not that high and they have a lot of debt. Makes a lot of money but does not pay down debt.