CSR is the building materials company most exposed to detached housing, and their performance over shorter time frames is very reflective of what’s happening in domestic residential construction. It seems clear that higher interest rates and elevated material prices due to a backlog of demand & supply chain issues will lead to a weakening housing market and that will weigh on CSR. However, if this proves to be a short sharp downturn, followed by the same sort of recovery then CSR will start to price that in as the data on housing bottoms. We’re not there yet, however, CSR is the stock best positioned to play that theme.
They have a solid balance sheet having recently embarked on a buyback of up to $100mn, and we like this business, but just not yet!
- We can see CSR making new 2022 lows in the coming months.