The ASX 50 index is home to 50 of the largest companies on the Australian share market.
While not all of these shares are necessarily buys, one ASX 50 share that could be is listed below.
That's the view of analysts at Bell Potter, which have just initiated coverage on it.
Which ASX 50 share?
The ASX 50 share in question is James Hardie Industries plc (ASX: JHX).
It is a global building materials company and the largest global manufacturer of fibre cement products.
Bell Potter likes the company due to its market leadership position and belief that it is one of the most defensive and high-quality companies around. It said:
Since pioneering the material as a siding product in the 1980s, JHX has built and maintained market leadership through significant R&D investment, aggressive plant expansions ensuring low unit cost, and realising a powerful marketing machine, which underpins JHX's widespread brand recognition.
To that end, the Hardie name today has become synonymous with fibre cement as a building materials category – known colloquially in North America as 'HardiePlank' (with JHX c.90% category share). We see JHX as one of the most defensive and high-quality companies leveraged to US housing.
Sweet spot coming
Another reason that Bell Potter is bullish on James Hardie is that it believes that US housing is nearing a structural sweet spot. It explains:
JHX has c.65% exposure to the retrofit segment (R&R), which history suggests is generally less cyclical than new builds (c.35%). We estimate ~24m US single-family homes will reach their "prime" remodelling age (20-40 years) in 2027, marking an increase of +8% vs. 2023.
Notably, homes clad with vinyl – a category JHX has already substantially disrupted – are expected to age asymmetrically into this age bracket (+50% by 2030) and we expect should provide JHX with a significant opportunity for further share gain.
Time to buy
The note reveals that Bell Potter has initiated coverage on the ASX 50 share with a buy rating and $64.00 price target.
Based on its current share price of $53.82, this implies potential upside of 19% for investors over the next 12 months.
But with the James Hardie share price expected to tumble with the rest of the share market on Thursday following a selloff on Wall Street, it's likely that there will be even greater upside on offer in a few hours.
In addition, Bell Potter sees potential for the company's shares to rise even further based on its US ambitions. It concludes:
JHX recently outlined an ambitious target to triple North America EBITDA to ~US$3.4bn by FY35e which, according to JHX, would see the group deliver on a double-digit top-line CAGR and +350-500bps of margin expansion. We estimate 3x in FY35e (vs. BPe US$2.5bn) would be worth ~A$87.00 in share value today, supporting value upside potential should the market begin to price in this trajectory.
