The Boral Limited (ASX: BLD) is up 5.6% in late afternoon trading. That places Boral shares in the top 3 performers on the S&P/ASX 200 Index (ASX: XJO) today, trailing only AMP Limited (ASX: AMP) and CSR Limited (ASX: CSR). The ASX 200 is up a more sedate 0.4%.
The share price of the construction material’s group was hit hard during the wider market panic following the outbreak of COVID-19, tumbling 65% from 21 February through to 23 March.
Shares have come roaring back since then, with today’s gains putting Boral’s share price up 168% from the 23 March lows. Year-to-date, shareholders are sitting on a gain of 7%, compared to a loss of 11% on the ASX 200.
What does Boral do?
Boral provides building products and construction materials to Australian and international markets. Its three divisions are: Boral Australia, its integrated construction materials business; USG Boral, its plasterboard joint venture in Asia, Australia and the Middle East; and Boral North America, a building products and fly ash business.
Globally, the company employs more than 23,000 employees and contractors across 783 operating and distribution sites.
Why is the Boral share price up more than 5% today?
Last week Boral announced an agreement to sell 50% of its USG Boral division to Gebr Knauf KG for just over US$1 billion (AU$1.4 billion). If you’re familiar with Boral, you’ll know its decision to expand operations into the United States has been a drag on its profits and share price.
There’s no new market news available today to send Boral’s share price sharply higher. But it’s worth noting that building products company CSR is also up more than 5% at time of writing. And cement building supplier James Hardie Industries plc (ASX: JHX) share price is up almost 3%.
This indicates investors are likely taking positions in shares that should benefit from the massive infrastructure programs governments around the world are rolling out to help lift their economies from viral-induced recessions.
Although the outcome of the US election and the precise makeup of its next round of stimulus remain uncertain, the world’s biggest economy will most likely be signing off on a multi-trillion spending package in the near-term.
This, along with Australia’s own infrastructure cash splash and the massive development programs underway in China, should offer some healthy tailwinds for Boral’s share price.
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Returns as of 6th October 2020
More reading
- Westpac (ASX:WBC) reports FY20 result, ASX 200 up 0.4% today
- Elections, pandemics and rate cuts. Where to next for ASX share prices?
- AMP (ASX:AMP) share price up another 7% on top of last week’s record rally
- Why the CSR (ASX:CSR) share price is climbing today
- Takeovers will continue to rock ASX shares
Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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