This Boring Stock Still Makes Sense in 2024

An old friend is back in the news at the moment, and it has prompted me to look again at a stock that I recommended a while ago. What I found was that, despite it being 35% or so higher than it was then, it still makes sense as a long-term investment, and for the same reasons.

Back in October of 2022, I wrote a piece in these pages saying that if you wanted exposure to fuel cells, but without the kind of wild ride that came with investing in things like FCEL or PLUG, you should consider Linde PLC (LIN), an originally German industrial gas company that is now incorporated in Ireland and headquartered in the UK. The logic was that as they are the world’s largest manufacturer and supplier of the infrastructure and fuel needed by fuel cell operations, they would benefit from growth in that oft-hyped industry no matter which fuel cell company won the latest contract or generated the most buzz. And should fuel cell technology not really take off, LIN still had a solid core business to enable growth. This is what has happened since…

As you can see, nothing spectacular, but nor has owning LIN added to the stress in my life. It has been a steady grind up with occasional, relatively small pullbacks that all proved to be just opportunities to buy more at a discount.

For some people though, I am sure that LIN was just too boring to look like a good investment.  There is a tendency these days among investors towards unrealistic expectations. Encouraged by aggressive sales techniques in the financial publishing industry, the hyping of certain outperforming stocks, and a lot of hand waving and gesticulation by some financial news personalities, they believe that in order for an investment to be considered successful it must show gains measured in the thousands of percentage points over a few years. Everyone is looking for the next Tesla (TSLA) or the next meme stock. That is understandable. In fact, I do it myself, albeit only with about five percent of my capital. However, when I look back, with the exception of TSLA which I held long-term until recently, the best investment results I have seen have usually been in far less spectacular, some might even say boring, holdings.

Shell Oil (SHEL), for example, that I bought back in 2020 and have just held on to, reinvesting dividends and watching as the value of my holding grew by over a hundred percent, or Microsoft (MSFT) and Apple (AAPL) that have shown similar returns. The thing is, when it comes to long-term investments, boring is good. And while LIN is boring in some ways, the company’s history suggests that they are focused solely on maximizing profits.

The interesting corporate nationality that I mentioned above tells you that. They are, or rather were, a German company, but when Ireland offered better tax incentives for companies domiciled there than almost anywhere in the world, they became Irish, while basing operations out of Ireland’s more traditionally connected and geographically advantaged neighbor, a one-time enemy of both Ireland and Germany. Similarly, when the fuel cell business was all the rage, they got involved, but without over-committing in terms of resources. See, boring…

The thing that got them in the news recently is also boring in some ways, but it is another example of how Linde strives for boring old stability in an unstable world. They just signed deals with a couple of Chinese renewable energy companies, Guangdong Energy Group (GEG) and China Three Gorges Corporation (CTG) for the supply of power over the next 25 years. Given that Linde operates primarily in the EU, where there is an increasing move towards mandating that corporations meet green energy targets, that is a smart move. They have future-proofed themselves against that to some extent, but done so from a relatively cheap supply country, and at predictable costs for a quarter of a century.

It could be that a long-term deal with two Chinese companies will become a political liability for Linde at some point over the next 25 years, but that risk is more than offset by the stability and predictability factors, and if such problems do occur, I have faith that Linde will deal with them in a quiet and, quite frankly, boring way.

With the stock having pulled back a bit after an uncharacteristic spike up above $430 in December but then having bounced off of the $400 level, now looks like a good time to buy LIN or, if you took my advice in 2022, to add to your holdings. You may not become a millionaire overnight if you do, but you will own a stock that has shown over the years that it can grind upwards in a boring way and, through the miracle of compounded returns, can become a core source of gains in your portfolio through the market’s ups and downs.