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James Hardie Plc (JHX) $50.00

We’ve never doubted the quality of JHX but operating a cyclical business leaves it vulnerable to relatively large swings in share price which brings with it opportunity – the stock’s decline from its August high is arguably such a case in point. Following August results the shares have retreated with headwinds facing the sector leading to the business flagging a tougher quarter ahead and some analysts have downgraded the building products company accordingly, there’s now a mixed bag of broker calls on the stock, albeit with a positive bias: 1 Sell, 6 Hold and 8 Buys.

Trump’s victory delivers a 2-edged sword; as he pumps money into the system, construction should benefit although the initial reaction of US homebuilders has been muted as his inflationary policies are likely to lead to interest rates being “higher for longer”. In the US over the last 5-years, the average home price has risen roughly 75% and market inventory is averaging about a third of what it used to be, sounds like Australia. Trumps catch phrase of “drill baby, drill!” should also have been “build baby, build!” after 3-years of declining activity.

After the Federal Reserve boosted interest rates to the highest level in two decades, demand weakened and ultimately left homebuilders with the largest supply of new homes in 16 years. Confidence can be a slow worm to turn but the Fed has already cut rates by 0.75% in recent months and although Trump’s policies concern the Doves, he does want interest rates lower.

  • We believe that the US building activity will pick up in 2025/6.
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US Housing Starts – Source Bloomberg/US Sensus Bureau

We’ve been describing JHX as an FY25 turnaround story all year but Trump’s victory could bring this forward, especially as he attempts to dramatically light the fire of the US economy.

  • We believe JHX is well positioned for a Trump America enjoying over 70% of its revenue from the US.
JHX
MM is bullish JHX
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James Hardie Plc (JHX)
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