4. Linde Plc (NASDAQ:LIN)
Number of Hedge Fund Holders: 63
Linde Plc (NASDAQ:LIN) is the global provider of industrial gas, operating in more than 100 nations. In addition to equipment used in the production of industrial gases, the company’s primary products are atmospheric gases (such as oxygen, nitrogen, and argon) and process gases (such as hydrogen, carbon dioxide, and helium). Linde provides services to a broad range of end markets, including steel, chemicals, manufacturing, and healthcare. Around 2023, Linde brought around over $33 billion in sales.
Being the world’s biggest producer of industrial gas, Linde boasts the advantages of a highly beneficial industry structure. Industrial gas firms have demonstrated sustained profitable returns by their economic moats, even though they are in the business of selling commodities, namely industrial gases. Although industrial gases usually represent a small portion of customers’ expenses, they are an essential component to guarantee continuous output. To make sure that their businesses are operating well, consumers are therefore frequently prepared to pay a premium and sign long-term contracts. Industrial gas producers benefit from long-term contracts and high switching costs, which allow them to create a relatively stable cash flow stream and profitable returns.
Mar Vista Global Strategy stated the following regarding Linde plc (NASDAQ:LIN) in its Q2 2024 investor letter:
“Linde plc (NASDAQ:LIN) is the world’s largest, global industrial gas producer. The company enjoys the highest profit margins and returns on capital in the industry. Linde’s primary products are atmospheric gases and process gases. Industrial gases have benefitted from secular growth trends in decarbonization and carbon sequestration. Moreover, the opportunity in blue and green ammonia and hydrogen are substantial. Projects in these areas are quickly being added to its backlog for future growth. We see these secular trends as long-term positives for Linde and the entire industrial gas industry.
Linde believes it can grow its volumes with new applications; the buildout of small, on-site plants using its technologies; and focusing on growing geographies such as India, Malaysia, Vietnam, China and Brazil. Despite the long-term growth opportunities, recent demand trends have slowed due to weak global industrial production. Among the regions, the U.S. remains resilient, with volumes flat to slightly negative. Europe, Latin America, the Middle East, and China are all sending mixed economic signals. We believe these slower trends are transitory in nature, providing an opportunity to purchase shares in Linde at attractive prices.”
BofA analyst Steve Byrne maintained a Buy rating on the company shares and increased the company’s price target from $495 to $516. Despite a Q2 beat, the analyst believes that guidance “remains conservative in our view” and that, given the company’s recent performance, especially in F&B, Electronics, Chemicals & Energy, and Manufacturing, more sequential volume growth is likely.
Alexander Mitchell’s Scopus Asset Management is the largest stakeholder in the company from among the funds in Insider Monkey’s database. It owns 34,835 shares worth $15.29 million as of Q2.
