Why is the James Hardie (ASX:JHX) share price trading at all time highs?

The cement manufacturer has had a great past two months.

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Shares in James Hardie Industries Plc (ASX: JHX) finished the day in the green on Monday and nudged past their record high to close at $56.39. Meanwhile, the James Hardie share price has started Tuesday’s trading session in the green and is currently up 0.14%.

James Hardie has been on the upward trajectory these past 2 months, with shares bouncing off a low of $47.91 in mid-October. Let’s take a closer look.

Why’s James Hardie trading at all time highs?

Whilst it’s been relatively quiet out of the fibre cement manufacturer’s camp lately, it hasn’t stopped investors queuing up to secure a spot in the company.

Although, the S&P/ASX 200 Materials Index (XMJ) has also bounced off its previous lows in November with authority.

As we walked through the month, the index finished up more than 8% in the green, indicating strengths in the broad sector.

Aside from this, James Hardie is a quality company that has a “really long term growth trajectory and that it’ll do just fine regardless of what bond yields do in the short term”, according to Sage Capital.

The firm reckons that James Hardie covers its bases due to positioning in the fibre cement industry, whilst it continuously adds market penetration.

Part of its strong positioning in the industry is due to its intellectual property that is used in manufacturing fibre cement, Sage says.

Add in its exposure to the US – which is far more expansive than the Australian residential construction market – and there is a recipe for success, the firm believes.

The team at the Macquarie also liked James Hardie’s recent first half results, which it called a robust set of numbers.

It noted the company’s “raised guidance is a positive, particularly set against clear growth investment in [operating expenditure] opex and additional plans to add capacity to the network (including the EU)”.

Meanwhile fellow brokers Morgan Stanley, Jefferies and RBC Capital Markets are each bullish on the shares too.

Each firm values James Hardie at $62, $70 and $64 respectively, implying an average upside potential of around 16% at the time of writing.  

Investors appear to be feeling the same way. For instance, volume of trading on the company’s shares was 103% of its 4-week average volume yesterday.

James Hardie share price snapshot

In the last 12 months, the James Hardie share price has climbed 50% after rallying a further 48% this year to date.

In the past month, James Hardie is up 3% and its shares have climbed 3% in the past week as well.

These results are well ahead of the benchmark S&P/ASX 200 Index (ASX: XJO)’s return of around 10% in that time.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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