Reece (REH ) has direct exposure to housing via selling kitchen, bathroom, and laundry products with over 50% of their earnings coming from the US with the balance in Australia. The stock has continued to recover in line with US homebuilders and while we believe it’s an excellent medium-term business with both of its markets needing new homes asap we are conscious that its already bounced strongly over the last year diminishing the risk/reward in the process.
- MM prefers James Hardie (JHX) for exposure to the housing recovery story although it has now reached our initial upside target area of ~$39.
MM is neutral toward REH as it approaches $19
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