REH

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$28.52 reece limited

mostly agree with your logic, only disagree with the price paid...

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noomxx

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02/01/23

20:34

Post #: 65501109
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Originally posted by vic_wattle: ↑

"The "correct" buying price probably needs to weigh the potential runway for growth against what the immediate economic future does to that runway"

Which is precisely what the market does. It is very efficient at prepricing 3-30 months ahead (0.25 - 2.5 years). That range is governed by uncertainty levels.

High uncertainty, the market stares at its feet. Think 9/11 and the "war on terror" years, GFC and the rolling series of shocks during 2008, covid black swan, inflation and interest rate shock of 2022. In a highened state of collective anxiety, driven by shocks and high uncertainty, the market does not think clearly and can only think about the near future of 3 months.

Then as uncertainty reduces, the market's collective anxiety calms and it gradually raises its eyes to the horizon and preprices what earning may look like 2.5 years ahead.

And that is where we are today I think.

The market spent most of 2022 in a state of high uncertainty. 12 months is a long time to prepare and adjust to the possibility of a US downturn in 2023.

And now with uncertainty lifting, the market is looking beyond FY23. It is starting to preprice FY25.

Sure we may get an earnings downgrade from REH in jan or feb, but I think any reaction to that will be short lived, as the market continues to calmly look to FY25 and beyond.

And what does FY25 look like for Reece? It looks fairly rosy from what I can see. The US housing industry will be in full swing trying to reduce their current housing shortage. Likewise the housing industry here in Australia, will be at full throttle trying to accomodate the increased immigration rate over the next few years.

Having read the Ferguson annual report, it was interesting to read about how fragmented the US plumbing supply industry is. This represents a significant opportunity for Reece to increase its market share in the US and become a dominate player over the next decade.

And what will REH earnings look like over the next decade if they start to dominate the US market as they have here?

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mostly agree with your logic, only disagree with the price paid to acquire the business using your logic.

Still that's what makes a market.

REH Price at posting: $14.15 Sentiment: None Disclosure: Not Held
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0 Great analysis

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(20min delay)
Last $28.52		Change -0.050(0.18%)		Mkt cap ! $18.42B

Open	High	Low	Value	Volume
$28.11	$28.65	$27.89	$6.693M	234.8K

Buyers (Bids)

No.	Vol.	Price($)
2	1890	$28.47

Sellers (Offers)

Price($)	Vol.	No.
$28.61	1627	1

View Market Depth

No.	Vol.	Price($)
1	1000	27.600
1	30	26.500
1	550	26.000
1	239	25.000
1	21	24.910

Price($)	Vol.	No.
28.890	175	1
29.300	173	1
29.400	300	1
29.450	500	1
29.500	520	2

Last trade - 16.10pm 27/09/2024 (20 minute delay)

REH (ASX) Chart

mostly agree with your logic, only disagree with the price paid...

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mostly agree with your logic, only disagree with the price paid...

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