Praxair to build a new hydrogen plant
In a press release on February 28, Praxair, the wholly owned subsidiary of Linde (LIN), announced the construction of new hydrogen plant in Louisiana. The plant will supply hydrogen to a major refinery in the region, which has entered into a long-term agreement. However, Praxair didn’t disclose the financial aspects of the deal.
The plant is expected to be operational in 2021. The plant will have the capacity to produce more than 170 million standard cubic feet per day of high-purity hydrogen. Dan Yankowski, the president of global hydrogen division, said, “Praxair is committed to be the preferred hydrogen supplier in the U.S. Gulf Coast and this investment further reinforces our strategy to support industrial growth in this vibrant region. We understand that hydrogen is a critical requirement for our customers and are committed to providing long-term reliability.”
Linde’s stock price update
On March 1, Linde said that it expects slower growth in its top line for 2019 due to unfavorable foreign currency. As a result, Linde stock fell ~3.0% and closed at $168.38 for the week ending March 1.
Despite the decline in the stock price, the stock traded 4.7% above the 100-day moving average price of $160.80. Analysts see little upside from the current price and have provided a target price of $175.3, which implies a return potential of 4.1% over the closing price as of March 1. Linde’s 14-day relative strength index is at 53, which indicates that the stock isn’t overbought or oversold.
Investors looking to invest in Linde indirectly could invest in the Materials Select Sector SPDR Fund (XLB), which has invested 15.6% of its portfolio in Linde. The fund’s other holdings include LyondellBasell (LYB), FMC (FMC), and Albemarle (ALB) with weights of 4.3%, 2.0%, and 1.6%, respectively, as of March 1.