RWC General Discussion

Quite a few stocks have had the above titled thread commenced, so time for it here.

Today (Tuesday 3 January) was a market rout by 1130 AEDT (though not thus far for RWC), with fears of a USA recession in 2023 plus the mainland Chinese COVID situation, and apparently wholesale natural gas prices being slashed.

While it's best for us to DYOR, here merely for information is an analyst discussing RWC with the 'lively' blog:

Reliance Worldwide Corporation (ASX: RWC)

Dion Hershan:At Yarra, we're always happy to take a contrarian position if we can find high-quality companies that are out of favour. One that's a standout to us at the moment is Reliance Worldwide (ASX: RWC). They're a leader in the plumbing parts business. It's got a degree of cyclicality, it's exposed to the US economy, and there are pretty despondent expectations around that company. In fact, the stock's gone from over $6 a share to around $3 a share, and the selloff has been stark. And a lot of people are concerned that there's going to be a slump in US housing, and they'll be dragged down with it. And we think those concerns are largely misplaced.

Most of what Reliance does is sell small plumbing parts for essential repairs. We don't think it's particularly discretionary. This company's had a 20-year track record of growth. It is a market leader. Margins last year were under pressure because copper and plastic and other input costs went up. They've now re-priced their product suite, and we think they're placed into 2023. So as it stands, we're buying a high-quality company that's out of favour, stock has halved, but it's trading 11 or 12 times forward earnings, and we think that's really compelling.