Looking back over the past 12 months we have had a number of sectors perform well. We started with uranium, moved to biotechs, copper, iron ore, oil and gas, gold, and financials.
Why did these sectors outtperform in a given period of time??? Out of favour? oversold? Or maybe just the next bubble. Anything with Uranium in their name at one point went up, like wise with iron ore.
Now what sector am I looking at now???
I thought what is the most out of favour sector at the moment. And I cam up with the US housing market.
Stocks that I have found this sector are James Hardie and boral Bricks.
James hardie is an interesting stock, because it is still making great a profits, in a sector that has reported to be struggling. They have a monoply on the market over there, so the question is how will JHX perform if the Housing market picks up. Lets say in 3-5 years. Their EPS are increasing.
If James hardie and Boral are cyclical stocks, isn't the time to buy when they are out of favour??
The US dollar has had a effect on these two companies, but if there is an interest rate rise, it will probly see the Australian Dollar come off wont it???
MY view is that the Australian dollar / US dollar will correct in 2008 thus leading a number of US exposed stocks such as JHX, BLD, and you could probly throw in Newscorp, MIG, and Iluka, Aristocrat, CSL and any other highly leveraged US stock.
I guess its all a timing thing. But for those long term investors, wanting quality companies not just the next fad, biotech, or iron ore explorer, it's worth considering why quality companies such as JHX, Boral, etc are dropping.
The US dollar, and the housing sector is making a massive difference to a number of stocks,