Jim:
How does a stock go
up 8.6% on a
down-312 day?...
Ask
Airgas Inc. (ARG)...
which up today on a
terrific quarter.
We've always liked
ARG, which supplies
industrial,
environmental and
medical companies
with everything from
hydrogen to helium
to argon to
oxygen... On this
show, regardless of
the economy and
today, ARG proved us
right... it can go
up.
Although,
remember... probably
the more salient
fact is that the
stock is down 46%
from $57.85, where
it was recommended
here on May 8th...
We own that. It was
part of a series of
stocks that we
thought would
continue to do well,
until we turned on
the industrials...
but not fast
enough... as, you
know, we're not
alone in that, but
we blew it.
See all
of
tonight's
stocks
mentioned
on
Yahoo!
Finance,
here...
Friday,
October 24, 2008
(Cont'd from
above)...
We thought the
earnings would come
through and the
stocks would go
up... and that's
what happened here,
in terms of the
earnings, not the
stock. ARG didn't
just report a great
quarter today. I
think it convinced
the Street that it
was more than just
another industrial
company that was
getting kicked in
the butt...
It beat the Street's
consensus estimates
by 3 cents... and
the key to the
quarter was higher
margins... remember,
they made more money
per sale... and an
8% increase in
same-store sales,
driven by a 10%
sales growth, and a
strategic products
division that caters
to medical, life
sciences,
environmental and
food applications...
all non-cyclical
areas that, in
total, make up 40%
of ARG's revenues.
ARG also raised its
quarterly dividend
to 16 cents a share,
and maintained its
full-year outlook,
in contrast to many
of the other
cyclical companies
out there that have
cut guidance.
Even with today's
move, ARG is trading
at just 9x earnings.
Remember, nobody
trusts the earnings
estimates anymore.
And that is
inexpensive for this
kind of growth. And,
while I don't think
price-to-earnings
multiples are
reliable indicators
anymore of value for
a lot of stocks, ARG
is... let's just say
that it's multiple
is more
trustworthy...
Now, like the
example of U.S.
Steel that I gave
earlier, this one's
down just $65 to $27
in five months,
before bouncing up
$4 today.
Again, a sickening,
huge decline when
the company was
doing fabulously...
Sobering isn't
it?...
I want to know what
allowed ARG to beat
this quarter, and if
it can keep up this
kind of performance,
or is it what
everyone's telling
me... this is the
last good quarter
for many cyclical
companies, including
companies like ARG.
So I've got ARG's
CEO, who's been a
great friend of the
show, Peter
McCausland on the
line...
Mr. McCausland,
welcome to Mad
Money...
Jim's comments
AFTER the interview:
I struggle everyday
like Peter does...
Am I too bearish? Am
I too negative? I
take my cue from
trying to avoid
losing money.
Airgas Inc. (ARG)
has lost you money
since I recommended
it. But at least you
hear that it's the
business doing
well... it's the
stock doing badly.
It could be a
forecast? I don't
know.
