Our Algo Engine generated a buy signal for JHX recently at $21.50.
With the US housing cycle remaining strong, (although weak numbers in June are the reason for some caution), and James Hardie having a dominant market position in fiber cement, we think the long term trajectory for earnings & margins are strong.
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FY19 revenues should increase 20% and underlying EBIT will jump from $380m to $480m.
With the stock trading on a low 2.2% forward yield, we recommend adding a covered call option to enhance the income.
Selling the $23.50 October strike adds $0.50 per share of additional cash flow.
JHX goes ex div $0.30 on the 12th of December.
