This ASX share is up 104% and just gave $280m to shareholders

Definitely not in a glamorous industry, but its investors have partied long and hard. And these fund managers reckon there's more to come.

| More on:
A happy construction worker leap-frogs over another as a third looks on

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's that time of the year when professional investors sell off their winners and look for the next bargains.

One ASX share that Wilson Asset Management portfolio managers Matthew Haupt, Catriona Burns and Oscar Oberg are excited about for the new financial year is Fletcher Building Limited (ASX: FBU).

The New Zealand company plays in the not-so-glamorous construction materials supply business. Think along the lines of concrete and flooring.

The Wilson trio revealed that both WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX) funds now hold the stock.

"Its share price finished the financial year up 104%," they wrote in a memo to clients.

"Fletcher Building is in a strong financial position, announcing that it expects earnings before interest and tax (EBIT) for FY2021 to be between $650 million to $665 million — towards the upper end of the previous guidance range."

Fletcher Building just gave heaps of money back to investors

The excellent numbers gave Fletcher Building enough confidence to reward its shareholders handsomely last month.

"The company began returning capital to shareholders in the form of a NZ$300 million ($280 million) on-market share buyback in June," read the Wilson memo.

Fletcher chief executive Ross Taylor said in May that "leverage [is] expected to remain below our target range in the medium term". 

"This position provides us with capacity to recommence capital management and distribute up to NZ$300 million to shareholders."

Fletcher's ASX shares were up 0.93% on Friday, to trade at $7.02 in the afternoon.

Future looking bright for Fletcher

The Wilson portfolio managers don't believe the party has ended with the June buybacks.

Fletcher Building will continue to be a post-COVID recovery winner, they reckon.

"We believe Fletcher Building is well positioned to take advantage of market tailwinds, including a pick-up in construction activity and the low interest rate environment," their memo read.

"Additionally, the company continues to benefit from federal government stimulus, such as the Home Builder scheme in Australia and infrastructure stimulus in New Zealand."

Fletcher now has a market capitalisation of $5.74 billion. The company is dual-listed in its country of origin as Fletcher Building Limited (NZE: FBU).

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Materials Shares

smiling worker stands before power generator technology
Materials Shares

Fortescue shares jump 5% on record performance

This mining giant was in fine form during the quarter.

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Materials Shares

Should you buy Pilbara Minerals shares today?

Let's see if analysts think investors should be buying the lithium giant's shares.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Expert says this ASX mining stock could rise almost 30%

Let's see which miner is being tipped as a buy for investors right now.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

BHP shares charge higher on record copper and iron ore production

Let's see how the miner performed during the fourth quarter.

Read more »

A man stands with hands on hips surveying construction of three high-rise buildings.
Materials Shares

Building activity on the rise – will ASX materials shares benefit?

New data from the March quarter shows a sharp rise in building activity. 

Read more »

Man smiling at a laptop because of a rising share price.
Materials Shares

Macquarie predicts 11% upside for this ASX materials stock

Here's why the broker is positive on the stock.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Rio Tinto share price falls on Q2 update

Let's see what the mining giant reported for the second quarter.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Materials Shares

Could these 3 ASX materials shares be set to double?

This broker has buy ratings and aggressive price targets for these holdings. 

Read more »