It's really depressing for shareholders to watch a high-quality ASX 200 share going down, down, down after hitting an exciting historical peak.
But that's what's been happening for James Hardie Industries plc (ASX: JHX) investors since early 2022.
The building materials supplier hit a historically high price of $58.07 on 8 December 2021.
Over the previous two years, the ASX materials share had returned an outstanding 97% capital gain.
Today, the James Hardie share price hit an intraday high of $34.60.
That's well off its all-time high, but it's an 11.4% improvement over the past four weeks.
So, has the tide turned?
What's driving this ASX 200 share higher of late?
James Hardie hasn't released any price-sensitive news since 3 March, when it announced it had been removed from the ASX 200 due to its falling share price.
However, brokers have been saying since the start of 2023 that James Hardie has been oversold.
Two reasons for the share price decline were rising inflation and interest rates, both of which hurt the housing markets in Australia and also the United States, where James Hardie has a significant business.
On top of that, global supply chain disruptions have caused many delays in housing construction activity.
Bureau of Statistics data released this month shows a 15% decline in new home builds and a 34% decline in apartment builds.
Master Builders Australia chief economist Shane Garrett says there now are fewer new projects in the pipeline.
All of this led to James Hardie reducing its guidance for FY23 when it released its Q3 FY23 results in February.
However, inflation has turned a corner and is easing off in both Australia and the US.
Australia has also paused its interest rate hikes, and the latest data from CoreLogic points to a stabilisation in house prices.
So, are investors returning to James Hardie shares because they look like a bargain with gathering tailwinds?
What do the experts say?
Back in February, after James Hardie reduced its FY23 guidance, top broker Citi said the ASX 200 share was "close to an inflection".
Citi analyst Samuel Seow said:
Following a weaker than expected result, we believe the market will be looking for the last downgrade and we think this could be it.
Ironically, we see [the Q3] result as a buying event, and the total shareholder return outlook should be positive from here.
The James Hardie share price closed at $31 that day.
Seow said the company was "attractive", trading on an FY24 "trough earnings" multiple of 19 times.
Seow cited increased US mortgage applications and the 30-year fixed rate "appearing to settle" as tailwinds for the ASX 200 share.
Citi maintained its buy rating but lowered its 12-month share price target by 6.5% to $34.60. Funnily enough, that's the intraday high James Hardie shares reached today.
Are ASX 200 share investors listening?
Also in February, Baker Young managed portfolio analyst Toby Grimm said James Hardie could only move up from here.
Grimm said:
With US interest rates likely to peak during the first half of calendar year 2023, we see potential for a share price recovery later this year.
In our view, the shares offer long-term value at current levels.
At the time, 11 out of 16 analysts on CMC Markets recommended buying the ASX 200 share. Ten of them rated it a strong buy.
Also, fund manager L1 Capital said the ASX 200 share could "grow at an above-market rate for many years to come".
Last month, Goldman Sachs said James Hardie was one of several ASX 200 shares flying under the radar.
Goldman gave James Hardie a buy rating and a 12-month share price target of $39.50.
It highlighted that its "share price is implying an EBIT of US$681m vs GSe FY24e of US$716m."
Today, Wilsons equity strategist Rob Crookston says James Hardie is "an attractive investment at this juncture".
Crookston explains:
There are strong structural tailwinds behind the US and Australian housing markets.
We think James Hardie is well placed to take advantage of market softness to strengthen its market position and drive further profitable volume share gains.
James Hardie currently trades on a price-to-earnings ratio (PE) of 17x, which is 1 standard deviation below its 10-year average.
James Hardie will announce its Q4 FY23 results before the market open on 16 May.
