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What Building stocks does MM like today?

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What Building stocks does MM like today?

Hello MM team, I was doing some research on building stocks and noted that analysts forecast earnings for Brickworks (BKW) point to a significant reduction in FY24 followed by almost flat growth in FY25. James Hardies' earnings forecast, on the other hand, is expected to continue to grow. Both companies have exposure to the US market, and somewhat track the US Philadelphia Housing Index. Though BKW have (in my humble opinion) an interesting exposure to industrial property development through their JV with Goodman. I'm a happy holder of JHX, but BKW looks interesting as a business. Besides, sooner rather than later, Australia will need to build more housing for a growing population. Is BKW overvalued or misunderstood? Thanks, Angela


Hi Angela,

After its recent 15% pullback below $41 we like the risk/reward of quality operator JHX. As you say the company delivers excellent exposure to the US construction market.

However, for additional portfolio weighting towards the Building Sector MM would be looking more toward a beneficiary of the much anticipated population growth in Australia – CSR is our preferred option and was discussed in Thursdays Report: “What Matters Today: How to position portfolios for major population growth

With Brickworks, their earnings will decline given their indirect 16% holding of New Hope Hope (NHC), via a 40% holding in Sol Patts (SOL) who in turn own 40% of NHC.   NHC earnings will be down given the fall in coal prices.

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James Hardie Industries PLC (JHX)
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