As a company, Linde a largely positive year. Linde, the stock, proved to be an underperformer in 2024 as geopolitical uncertainty, a sluggish U.S. manufacturing sector and conservatism in management’s outlook weighed on shares. A revival of economic growth would be a boon to both the company and the stock in 2025. Year-to-date performance: up 2.9% Forward price-to-earnings multiple: 25.1 versus a five-year average of 26.5 Our rating: Hold-equivalent 2 Our price target: $500 a share LIN YTD mountain Linde’s year-to-date stock performance. ’24 look back Linde isn’t really one of those Club stocks where you can identify some designated point in time and conclude, “That’s what drove it this year.” It’s not like Meta Platforms and its “year of efficiency,” nor is it like Nvidia with a new product launch set to take the computing world by storm. It’s not like Amazon and its opportunity to grow into an overbuilt logistics network and improve profitability. By contrast, Linde is more of a “steady Eddie” kind of stock. In some ways, the company’s consistency and reliability can cause the stock to be overlooked. Consider this: Linde shares are on track to underperform the S & P 500 on annual basis for the first time since 2015. Sure, there were quarters in which Linde’s sales came up short, but given its position way up in the supply chain, that has more to do with end market demand — and, by extension, the broader economic backdrop — than with management’s execution or the attractiveness of its offerings. After all, Linde sells industrial gases. It does not sell cars, laptops or smartphones or other products that require constant innovation to appeal to consumers in a crowded marketplace. Its gases help make the production of those things possible, though, which is why demand in those respective markets impacts Linde’s results. One part of Linde’s 2024 that did not come up short is operating margin and earnings. Its quarterly results for both key metrics outpaced expectations in all four earnings reports released this calendar year, which includes the fourth quarter of 2023. ’25 look ahead Linde executives should keep up their record of consistent execution. As a result, we’re expecting more of the same when it comes to bottom line growth. For Linde’s topline and volumes to really accelerate, we will need to see a pickup in economic growth since that, in turn, will drive the wide-ranging end markets that the company serves: health care, food and beverage, electronics, manufacturing, chemicals and energy, and metals and mining. The first three are more consumer focused and, for that reason, tend to be more resilient. The latter three are industrial focused and tend to be more cyclical. Energy costs and their impact on global economic activity will remain something to watch in 2025, but it’s important to note that Linde contractually passes these costs through to customers. That can impact headline sales and profit margins, but it shouldn’t impact actual profit dollars – except to the extent it weighs on sales, of course. Our confidence in Linde going forward was on display earlier in December when we used recent weakness in the stock to add to our position . It’s not unreasonable for Linde shares to see some pullback, given Linde is a global presence and the economic outlook around the world is murky. However, the market has gotten too down on the stock considering management’s history of strong execution. Once economic activity picks up and volumes bounce back, we expect Linde will be back to its usual beat-and-raise cadence. Linde ended the third quarter with the largest sale of gas backlog in company history, providing a positive setup into 2025. (Jim Cramer’s Charitable Trust is long LIN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
As a company, Linde a largely positive year. Linde, the stock, proved to be an underperformer in 2024 as geopolitical uncertainty, a sluggish U.S. manufacturing sector and conservatism in management’s outlook weighed on shares. A revival of economic growth would be a boon to both the company and the stock in 2025.