Air Products sells gases in three big segments: merchant gases (selling gasses to regular consumers), tonnage gas (manufacturing performance gases on the premises of their customers) and electronics (selling gases and chemicals used by silicon, LCD and solar manufacturers). Together, these businesses make up nearly 90% of APD’s operating profits and margins on all of the businesses are improving.
The company is growing, and the stock has momentum, Cramer said. Right now it’s in the business of hydrogen, which is integral in making cleaner fuels. In fact, APD is the world’s largest hydrogen producer and the company has begun building hydrogen plants next to refineries. Natural gas is typically a big cost in the hydrogen business, but APD has managed to pass that cost on to the refiners. And the greener we get, the more hydrogen we’re going to need, putting APD right in the sweet spot – its management expects investment in hydrogen projects at refineries to grow by $10 billion over the next decade. We also use hydrogen to refine sour crude, more of which is being produced worldwide. That equals more upside for APD.
Bottom Line: Air Products has a great business in gas, energy and tech, and it has the added advantage of being an over $80 stock that Cramer thinks is making a beeline for $120.
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