Is JHX a buy today or should we wait?
Hi Guys I'm of the opinion that JHX is a quality company that should be added to a portfolio at the appropriate time given the cyclical nature of the industry it operates in. Is it a buy today? Cheers, Nick
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Answer
Hi Nick,
As we’ve said previously JHX is well-positioned to benefit from increased construction activity, in the US and Australia – in FY24 JHX generated over 70% of its revenue in the US. Interestingly the Australian-based JHX has actually led this weeks ~8% pullback by the US Homebuilders Index.
- Credit markets have significantly reduced the number of rate cuts being priced into bonds which removes a short-term tailwind for JHX and the construction sector.
As you say JHX is a quality cyclical business which is retracing at the moment, the ideal time to start accumulating a position assuming we believe central banks will stave off a recession – certainly the current view of bond markets. However, on Thursday Reece (REH) fell over 7% after they warned of challenging conditions in the housing market remaining, saying “As we look ahead, the lead indicators continue to be challenging in both regions. While the US has seen its first rate cut, this will take time to work through the system.”
- We like the idea of accumulating JHX into weakness below $50 and it could easily find itself in our Active Growth Portfolio by Christmas.
