We're buying 25 shares of Linde at roughly $430. Following Wednesday's trade, Jim Cramer's Charitable Trust will own 190 shares of LIN, increasing its weighting to about 2.25% from about 2%. We're putting cash to work Wednesday in an oversold market. After Tuesday's close, the S & P 500 Short Range Oscillator showed the market became more deeply oversold. Any time the Oscillator is this low, we get more opportunistic about stocks and look to buy quality companies as we also did Tuesday with adds to our Home Depot and BlackRock positions.
The recent selloff in shares of industrial gas giant Linde has caught our eye -- and reflecting Wednesday's buy, we're upgrading our 1 rating . Linde has the misfortune of being lumped together with the S & P 500 materials sector , which has been the second-worst-performing area in the market quarter to date. Only health care has been worse. We think Linde stock has been unfairly punished -- creating an opportunity to repurchase the 25 shares we sold in late July at around $447.
In a note last week, Barclays analysts cited two reasons for Linde's lackluster share performance. One was concerns about the company's ability to hit its consistent 10% or more earnings growth algorithm. The other has been a rotation into peer Air Products and Chemicals , a company with a spotty track record of execution that has gotten attention due to an activist campaign. Barclays downplayed both of these factors. On the slowing earnings growth potential, the analysts relayed management's confidence in their ability to drive earnings growth through self-help actions like margin improvement, backlog conversion, and capital deployment. They also see clean energy opportunities and electronics backlog growth as an added kicker. On the money flows into Air Products, that's harder to quantify. Barclays thinks it's a short-term trade that could unwind ahead of Air Products' annual meeting on Jan. 23.
Linde truly is a global company and there is a lot of global economic uncertainty out there. But the market has gotten too down on the stock because of management's history of strong execution and discipline. Once economic activity picks up -- perhaps from lower interest rates -- and volumes increase again, we expect Linde will be back to its usual beat-and-raise cadence. The fact that Linde ended the third quarter with the largest sale of gas backlog in company history is a positive sign of the future.
(Jim Cramer's Charitable Trust is long LIN. See here for a full list of the stocks.)
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