I think that the Brickworks Limited (ASX: BKW) share price looks like a buy with all of the coronavirus fears.
As of yesterday, the Brickworks share price fallen by 11% from 21 February 2020, though it is up this morning. I already thought it was good value before the fall, so today's price looks even better to me.
There are a few reasons why I think Brickworks would make a good buy:
Earnings diversification
It would be a mistake to think that Brickworks' only source of earnings is Australian building products, even though those earnings are actually good and diverse too – bricks and pavers, masonry and stone, roofing, specialised building systems, precast and cement, it's in lots of areas.
Brickworks recently acquired three brickmakers in the US which quickly made it a market leader in the north east of the US. There is a lot of work to be done to make the US business into what Brickworks wants, but there's a lot of promise and margin growth potential with the huge US market. Growing populations are good tailwinds in both countries.
The company also receives cashflow from its investments, which includes a 50% stake in an industrial property trust alongside Goodman Group (ASX: GMG). These investments alone back up the value of Brickworks' market capitalisation and essentially funds the Brickworks dividend.
Dividend
Brickworks' dividend is one of the best on the ASX in some aspects. It may not have the biggest dividend yield, its grossed-up yield is 4.5%.
However it has one of the most reliable dividends, if not the most reliable on the ASX – it has maintained or grown its dividend every year since 1976.
Growth
The company has been growing for decades as it diversifies and expands its building product range. In the latest result it mentioned it's still looking for bolt-on acquisitions and the property trust continues to build new industrial properties which will increase its value and lead to strong rental income for Brickworks.
A business that can keep growing for the long-term is definitely worth holding.
Foolish takeaway
It's now trading at 18x FY21's estimated earnings, which is fairly cheap in this era of low interest rates with such long-term growth prospects. I'd be very happy to buy shares today.
