Why the Reliance (ASX:RWC) share price hit a 52-week high

The plumbing supply business was breaking records on Friday as construction booms across the country.
The post Why the Reliance (ASX:RWC) share price hit a 52-week high appeared first on The Motley Fool Australia. –

The Reliance Worldwide Corporation Ltd (ASX: RWC) share price had an absolute blinder on Friday. Shares in the plumbing product manufacturer hit $5.46 before slightly retreating to close at $5.40. That was still up an impressive 4.05%. By comparison, the S&P/ASX 200 Index (ASX: XJO) finished the day 0.49% higher.

While there have not been any major market announcements out of the company since late April, there have been several external factors at play that may have been impacting Reliance shares.

Let’s take a look at some of these.

Why the construction industry is booming

Booming property market

As any first home buyer can tell you, the property market in Australia’s capital cities is surging. A recent article published by Domain Holdings Australia Ltd (ASX: DHG) claimed the price of housing in the nation could rise at 10x the rate of wages in 2021! Through a combination of record-low interest rates and high economic growth, the Australian property market has been fuelled to feverish levels.

One reason investors may have been becoming increasingly attracted to Reliance shares could be because they believe the company stands to benefit from the housing boom – as lots of activity in the property market could translate into a surge in property renovations and repairs.

In fact, on Friday the Australian Bureau of Statistics (ABS) confirmed new loan commitments for owner-occupied homes were up 4.3% in April to a record $23 billion. Investor loans increased 2.1% to $8.1 billion – a level not seen since mid-2017. By state, the biggest rises in new loan commitments were in New South Wales and Victoria – up 8.6% and 8.4% respectively. Sydney and Melbourne in particular have seen housing prices soar in recent months.

Construction industry coming up tops

As reported by Thursday’s Australian Financial Review (AFR), the construction industry is also experiencing a highly robust period at the moment. The selling prices of construction services are at their highest on record, and so are input prices and the pace of employment in the industry.

Judging by the new 52-week high for Reliance shares, it seems investors may believe suppliers like it stand to materially benefit from this record-setting period for the industry.

However, the AFR article did also report on fears this ‘era of good-feelings’ could be followed by a sharp bust period.

HomeBuilder second chance

While the federal government’s HomeBuilder program has wrapped up, 9News reported at the start of this month “thousands” of applicants who missed out due to a technical issue with their application will get a second chance to access the scheme that provided grants of up to $25,000 for the construction or renovation of a home.

Shane Oliver, senior economist at AMP Capital, said in April HomeBuilder was likely one reason why the housing industry not only survived but thrived during the pandemic.

This temporary extension of the construction stimulus could also possibly be exciting Reliance investors.

Reliance share price snapshot

Over the past 12 months, the Reliance share price has increased by around 66%. In March, the company paid a dividend of 6 cents per share – its largest in at least 4 years.

Based on the current share price, Reliance has a market capitalisation of around $4.27 billion.

The post Why the Reliance (ASX:RWC) share price hit a 52-week high appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

Why BetMakers, Domain, Link, & Nuix shares are tumbling

ASX 200 Weekly Wrap: ASX record highs tumble like… Costa shares

These were the best performing ASX 200 shares last week

ASX 200 surges to new record, Fortescue drops, Inghams flies higher

Link (ASX:LNK) share price on watch after receiving PEXA offer

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Reliance Worldwide Corporation Limited. The Motley Fool Australia has recommended Reliance Worldwide Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!