The last 12 months certainly have been tough for shareholders of companies that are exposed to the housing market. During this time the shares with the largest exposure to Australian housing have lagged the ASX 200 Industrials significantly.
One broker that believes this could be a buying opportunity for investors is Goldman Sachs.
Although the broker believes that house prices still have further to fall, it sees the heavily discounted valuations of housing-exposed stocks as too pessimistic.
In light of this, its analysts have picked out five shares which they believe can outperform despite the weak macro environment.
This is largely down to these shares having levers to pull to offset the weak macro, unique product offerings or structural demand that should support margins, and experience from prior cycles.
The five shares that the broker believes are in the buy zone are Adairs Ltd (ASX: ADH), Australia and New Zealand Banking Group (ASX: ANZ), Lifestyle Communities Limited (ASX: LIC), REA Group Limited (ASX: REA), and Stockland Corporation Ltd (ASX: SGP).
In respect to ANZ, Goldman believes that fundamentals for the banking sector remain solid and that ANZ is its preferred major bank pick due to being best positioned to face into the sector's slowing revenue environment.
Whereas for REA Group, the broker believes it can offset any softness in listings with price rises, increased depth penetration, new depth product launches, and moves into adjacent markets. Its analysts see the recent pull back as an opportunity to get in at an attractive price.
Should you invest?
I think that Goldman makes some great points with the fives shares listed above.
Whilst I'm not a big fan of Lifestyle Communities and Stockland, I would certainly be a buyer of Adairs, ANZ, and REA Group at current levels and expect them to provide solid returns for shareholders over the next 12 months.
