Airgas is the U.S.'s largest distributor of packaged gases and welding, safety and related products. In general, analysts see a choppy FY2009 for Airgas, with revenue expected to fall 5-10%, on both lower demand and pricing pressure.
Further, much of Wall Street has apparently abandoned the view of Airgas as a near-recession-proof play, extrapolating from recent bearish company comments regarding likely near-term results. The First Call FY2009/FY2010 EPS estimates for ARG are $2.78 to $3.18.
Hence, the view from here is contrarian, but not without basis: add ARG's cost-cutting efforts to an average market share of 25%, and a P/E of 13 looks fairly cheap, so a Buy rating has been issued, but with a tight Sell/Stop Loss.
Stock Analysis: Airgas is a high-risk stock. Consider buying a 25% position in ARG now; then buy another 25% in four months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your ARG position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $24.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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