TEMP - Linde: Strong Execution In This Shaky Macro Environment

• Investors have a lot to worry about nowadays as interest rates continue to march higher despite cooling economic growth. The outlook for stocks remains uncertain amidst inflation readings not seen.
• We believe there are very few excellent companies out there that combine a steadily growing, non-disruptive business with market-beating returns for shareholders.
• Linde Plc, the industrial gases giant shaped in 2018 through the merger between Linde AG and Praxair, has an outstanding track record of cash flow and dividend resilience.
• Compared to its nearest peer, Air Liquide, Linde has done a far better job in improving the underlying return on capital invested, which warrants a permanent valuation premium. Admittedly, the stock rarely gets cheap, so SWAN-type investors should be embracing the next inevitable dip.
• With shares offering a recurring free cash flow yield of 4.4% for FY ’22, we view Linde as a moderate “BUY” given its clear strategy calling for 10+ % underlying EPS growth, whilst at the same time maintaining the strong A- credit rating.

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