10 Best Materials Stocks to Buy According to Hedge Funds

4. Linde plc (NASDAQ:LIN)

Number of Hedge Fund Investors  in Q1 2024: 65

Linde plc (NASDAQ:LIN) is another industrial gas provider that hedge funds are piling into. Linde plc (NASDAQ:LIN) has a diversified business that allows it to target gas demand for industrial use cases and consumer products manufacturing. Some of its markets include the food and beverage industry, healthcare, and steel making. This allows Linde plc (NASDAQ:LIN) to balance out its revenue stream, and hedge against a slowdown in one segment via growth in others. However, it also leaves it at the mercy of the business cycle, as has been the case in its past couple of quarters. During its first quarter, Linde plc (NASDAQ:LIN)’s revenue declined by 1% annually to sit at $8.1 billion. This followed a 2% annual sales drop to $32.8 billion in the full year 2023 which was fueled by lower gas prices in several markets. However inflation has helped Linde plc (NASDAQ:LIN) in the long run, particularly due to the destabilization of the gas market in the aftermath of Russia’s Ukraine invasion. Linde plc (NASDAQ:LIN)’s revenue has grown by 20.5% between 2020 and 2023 due to price pass through, which is slowing down now as the market stabilizes.

Linde plc (NASDAQ:LIN) is also focusing on growth initiatives as opposed to simply relying on pricing power as evidenced by management comments during the Q1 2024 earnings call:

While volumes continue to track local industrial production, we know there is more we must do to grow. So while pricing remains an important lever for us, we’re also focused on other growth opportunities like small on-site, applications technology and investments, including acquisitions, to grow our network density, even as we trim certain areas of the portfolio, like equipment hard goods, which typically suffer in economic downturns.

Add to that, the contracted backlog, and we have a solid growth pipeline for the next few years ahead. Let me provide you with some additional color on the trends and opportunities by key end markets, which you can find on Slide 3. I’ll start with the consumer-related markets, which have proven their resiliency time after time. Healthcare has been quite stable year-on-year. While we continue to see sleep, respiratory and oxygen demand growing, sales have been partially offset by some rationalization of home care equipment offerings in the Americas and EMEA, which don’t meet the investment criteria. Food and beverage grew nicely at 6%. This is mostly driven by food freezing, beverage carbonation and aquaculture. We continue to see opportunities associated with the high quality and more sustainable foods.