Air Liquide: The ultimate defensive earnings compounder
Leader in one of the most stable businesses in the world providing stability and earnings growth in an uncertain world with margin upside
Welcome to the 44th investment case, 36th resilience and 25th reshoring/sovereignty idea on Crack the Market (and the most comprehensive Air Liquide investment case you will find online)! Join me and discover one of the most resilient compounders in the market in the last decades, a company that rarely disappoints, an unrelenting grower hyperfocused on improving its margin, a decarbonization champion, and the company behind so many of the world’s industry, electronics and our healthcare systems.
Twice a week, I will release deep dives into stocks and sectors that fit into the three themes that I see winning in this age of tariffs and deglobalization: resilience, sovereignty & reshoring, China along with opportunities in the AI data center value chain, Healthcare and many other megatrends.
Take advantage of this once in a generation opportunity to build long term wealth by investing in great stocks that will deliver returns for your portfolio for years to come.
You can already read my first 42 deep dives, all of which I see as winners in this new world of tariffs and deglobalization:
ASML (reshoring & China idea): The most innovative company in the world will 2.5x its EPS by 2030.
LKQ (resilience idea): The most defensive business in the auto industry is a tariff winner and could become a compounder.
Atlas Copco (resilience, reshoring & China idea): The best industrials business in the world is on sale, extremely resilient and will benefit from US reshoring.
Badger Meter (resilience idea): The perfect business in the perfect end market, water meters are the definition of resilience.
Knorr Bremse (resilience idea): Who knew making brakes was this lucrative? Rerating with self help story and upside from German infra plan.
Flex (reshoring idea): The electronics manufacturing giant building Nvidia’s servers and enabling reshoring is becoming a better business.
Itron (resilience & reshoring idea): Riding the grid investment super cycle and enabling smart grids.
Roper (resilience idea): A resilient cashflow compounder in the software space with inflecting growth.
RELX (resilience idea): The company to own forever – one of the very best businesses on Earth.
CPKC (resilience & reshoring idea): The rail connecting Canada/US/Mexico and benefiting from reshoring.
Novo Nordisk (resilience idea): The most exciting pharma company in the world is misunderstood and its growth engine is ready to roar back to life.
Kurita (resilience, reshoring & China idea): Water services expert with improving margins and benefiting from reshoring of semiconductor production.
Halma (resilience idea): High quality compounder in safety, health and environmental technologies.
Quanta Services (resilience & reshoring idea): Countercyclical compounder riding a multi decade infrastructure buildout.
Infineon (China idea): Power semiconductor leader with strong structural drivers (AI power and China auto) amidst a cyclical recovery.
Hubbell (resilience & reshoring idea): Pure play on US electrification demand driven by AI and grid investment cycle.
Iberdrola (resilience & reshoring idea): Best integrated utility in the world with a stellar track record and solid growth driven by networks and renewables
Nvidia (AI & data center idea): The backbone of the AI world is unstoppable.
Veolia (resilience & reshoring idea): Resource management giant (water, waste, energy) due for a rerating.
TJX (resilience idea): The retail giant that keeps winning.
DSM-Firmenich (resilience idea): The diversified ingredient powerhouse benefiting from a transformational deal.
Zoetis (resilience idea): Leader in animal healthcare.
Prysmian (reshoring idea): Global cable leader entering a golden age.
Bentley Systems (resilience & reshoring idea): The software compounder bringing infrastructure into the AI age.
Givaudan (resilience idea): The highest quality and most resilient ingredient compounder has a compelling valuation.
First Solar (reshoring idea): The rising Sun in a new electricity supercycle.
Arcadis (resilience & reshoring idea): An engineering and design consultancy giant poised for a rerating.
Thermo Fisher (resilience & reshoring idea): Life Science tools giant just had its clearing event and is a stealth reshoring winner.
Nexans (reshoring idea): Electrification pure play with visibility into 2030.
Croda (resilience idea): A covid darling with a ridiculous valuation is at an inflection point.
Copart (resilience idea): One of the best businesses on Earth is being sold off, should you jump in?
Schneider Electric (resilience & reshoring idea): The Electrification champion that keeps compounding.
Cadence (resilience idea): A defensive compounder in the semi space & one of the most profitable software businesses in the world is getting better.
SAP (resilience idea): The unstoppable growth engine behind every business.
FICO (resilience idea): The Score Behind the Score.
Siemens (resilience & reshoring idea): The best conglomerate on Earth is sitting on EUR70bn of optionality.
MP Materials (resilience & reshoring idea): The Western rare earth champion.
Sopra Steria (resilience & reshoring idea): This boring IT business is a hidden Defense and Sovereignty play.
Hoffmann Green Cement (reshoring idea): Cementing a green future.
Oracle (resilience idea): The Oracle of the AI Age.
Dassault Systemes (resilience & reshoring): Why are investors overlooking this Software giant?
Eli Lilly (resilience & reshoring): The best pharma company in the world.
After reading this article, you will understand why this company is so special thanks to the unique strengths of the industrial gas sector, what it does, why it is so defensive but also benefits from numerous growth drivers over the next years in decarbonization and digitalization, why its margin profile still presents significant upside, closing the valuation gap with its main peer and why it remains one of the best businesses to own for the next decade.
In this article I go through:
Air Liquide’s business in incredible detail and explain how it dominates its market.
What is the industrial gas market, why are gases everywhere in our economy and why this niche is so attractive and growing.
How it has been able to compound its revenues at a MSD rate and profits/dividends/cash at a HSD rate for over 3 decades.
How the company has managed to improve its operating margin by 500bps in 5 years.
Why its governance and future medium term targets could propel the business to new highs and partially close the valuation with its main peer.
