Great Old Economy Business That Isn’t Full of Hot Air

Great Old Economy BusinessThe stock market seems to have a bit more momentum in it over the short term. I’m still extremely cautious going forward, because the current up cycle in stocks and the economy is due for a break, even on a historical basis.

Regardless of what the main stock market indices are doing, there are a lot of good businesses out there; and a lot of “old economy” companies are actually doing very well in the current environment. These are bricks-and-mortar industrial and consumer businesses that deliver the practical products we need for the economy to function.

Not too long ago in this newsletter we looked at a great old economy business, A. O. Smith Corporation (NYSE/AOS), which manufactures and sells water heaters and boilers. (See “The Old Economy’s Back and It’s Making Great Money.”) You might not think that such a mature, old economy business could be doing so well, but this company is growing its revenues and earnings. On the stock market, A. O. Smith has tripled over the last 10 years, not including dividends. Further adding to this, it’s also fairly priced on the stock market.

Nothing gets more old economy than the distribution of gases used for welding and construction. Consider Airgas, Inc. (NYSE/ARG) out of Radnor, PA. This is a $7.0-billion company that pays dividends. It sells propane, oxygen, nitrogen, and many other gases for industrial and medical use. That’s pretty old economy if you ask me, and it’s a solid business.


On the stock market, Airgas has been a powerhouse wealth creator—and I never would’ve thought that industrial gases would be such a lucrative business. The stock has been moving virtually straight upward for the last 10 years. The company’s stock chart is below:

ARG Airgas, Inc stock market chart

Chart courtesy of

I love finding businesses like Airgas; and in this particular case, I can’t imagine demand for welding, industrial, and medical gases going down—at least not for an extended period of time. And what I like about this old economy business is its long-term consistency, both in its financial growth and on the stock market. I’d rather own a consistent wealth creator like Airgas than bet on a new technology any day of the week.

The old economy is back and countless industrial companies like Airgas are doing great. But here’s the kicker—a lot of these companies have been doing great on the stock market for years; you don’t hear about them. Want to know why? Because in the media, you just can’t sell it. Everyone wants to hear about Apple, Google, the end of the world, or Beyoncé, so the marketplace delivers. You just can’t sell a headline like, “There’s Really Good Money in Industrial Gases.” Nobody’s going to buy it.

And this is the struggle that many old economy companies have faced on the stock market for a number of years. Fortunately, times have changed, because there is no real economic growth out there. All of a sudden, stable, good businesses from all kinds of esoteric industries are doing well on the stock market, while former market leaders are trending lower.

The stock market is going higher over the near term, and when it corrects, the first stocks investors should consider accumulating are old economy winners that aren’t front-page news. These are the businesses that will keep delivering when everything else falls apart.