“HOT” stock: Brickworks (BKW)

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Brickworks (BKW) is an Australian manufacturer of bricks, blocks, pavers, roof tiles and timber products for use in the construction industry.

“BKW presents a generally positive outlook, although it anticipates some short-term demand weakness in its building products sector (Australia and the US),” Raymond explains.

“The value of its property portfolio has decreased due to a 110 basis point increase in cap rates to 5.2% compared to the previous year, despite ongoing strength in the underlying markets.

“Over the long term, the company is well-positioned to benefit from improved market conditions, with margins likely to increase due to recent investments in plant operations, portfolio rationalization, and restructuring.

“A reduction in capital expenditures following a period of investment may also provide room for gradual dividend increases.

“Our outlook remains largely unchanged, as we expect a relatively soft short to medium-term environment.

“Consequently, the company’s strategy will shift from investment-focused to cash flow generation, resulting in modest cash earnings growth through financial year 2025 (excluding revaluations).

“This supports our HOLD recommendation and a price target of $28.75 per share. “Overall, Brickworks is a strong option for long-term investors,” Raymond says.

 

Brickworks (BKW)  – last 12 months

 

Source: nabtrade

 

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