The Boral Limited (ASX: BLD) share price is on the move again this week, continuing the resurgence of the blue-chip building material and construction juggernaut since it bottomed out at $1.68 in March. Despite being down 2.79% at the time of writing, Boral’s current share price of $3.66 represents a 117% gain on its March low.

There’s no denying the company has underperformed in recent years, exemplified through multiple earnings downgrades and the ‘financial irregularities’ scandal of its American windows business. Despite this, here are 3 reasons why I remain bullish that Boral will turn the corner in FY21.

Management shake-up

In my opinion, the role management plays in the overall success or failure of a business is crucial. This is strongly endorsed by Jim Collins in his renowned management book Good to Great. Collins argues that getting the right people in the right seats on the bus – and getting the wrong people off the bus – is essential for a company’s broader financial success.

Boral is going through significant changes in management, as the old guard under current CEO Mike Kane departs and a new era is ushered in. Various changes to the management team of its troubled North American operations were announced last month.

This week, the highly anticipated appointment of Zlatko Todorcevski as the incoming CEO was also confirmed. In its statement to the market, the company revealed Todorcevski has 3 decades of experience in finance, business planning and strategy across several industries, and has maintained senior positions in Brambles Limited (ASX: BXB), Oil Search Limited (ASX: OSH), and BHP Group Ltd (ASX: BHP).

Furthermore, the recent 10% stake taken in the company by Seven Group Holdings Ltd (ASX: SVW) is likely to include a fresh face in Boral’s boardroom. Overall, I’m optimistic these changes may provide the company with reinvigorated energy to navigate the present economic environment. To extend the Jim Collins’ metaphor, Boral seems to be making the necessary management changes to get the bus back to full speed, and that will likely enhance the company’s financial performance in the coming years. This period of transition may be an ideal buying opportunity for prospective investors.

Shoring up its liquidity

The COVID-19 pandemic has reiterated the importance of robust company cashflow in all industries, but the construction and materials sector has been one of the hardest hit. Consequently, Boral’s liquidity has faced substantial scrutiny, leading to the company bolstering its balance sheet through various debt mechanisms.

These encompass a US private placement note issue of US$200 million, as well as various bilateral bank loan facilities including a $365 million, two-year debt obligation. These additional debts have allowed the company to bolster its balance sheet, which now holds $1.3 billion of cash and undrawn funds combined. Coupled with its expanded debt-financing campaign, Boral has been proactive in mitigating its capital expenditure by 15–20% this financial year, a strategic decision estimated to save up to $330 million.

With debt at relatively inexpensive levels due to the low interest-rate environment in Australia and globally, I like Boral’s decision to increase its cash on hand and improve its liquidity on the books. And as an added bonus for shareholders, the company’s decision not to utilise an equity capital raising has ensured no further dilution of its share price.

Having boosted its short-term cash flow, Boral seems well-placed to emerge from COVID-19 relatively unscathed financially. This should enable the company to maximise its profitability from new government projects heading its way.

Government-led infrastructure projects

Having recognised the lull in the construction industry, the federal government’s new JobMaker economic recovery plans will arguably send the Boral share price higher yet.

Earlier this week, prime minister Scott Morrison announced 15 key infrastructure projects that are being prioritised to facilitate jobs growth and spur economic productivity. According to an ABC article, these projects include the Snowy Mountains 2.0 scheme and a $10 billion inland rail project from Melbourne to Brisbane.

The government has also provided a $25,000 incentive for people to build or renovate their homes. This will further boost a national construction sector lagging in 2020 thus far.

As the premier supplier of construction materials, I think plenty of government and household work might be heading Boral’s way in FY21. At a time when large-scale projects are drying up left and right, Morrison’s infrastructure plans may be the lifeline the company needs to increase its revenue and unlock further returns for shareholders in the year ahead.

Foolish takeaway

Having watched this company’s share price claw back the majority of its losses in the past month or two, some prospective investors may feel they’ve missed the chance to get on the Boral bus.

Nonetheless, I think the shake-up in management may bring with it new ambition to take the company in a new direction, and this may favourably coincide with post-COVID government infrastructure projects being accelerated.

Overall, I think Boral has the necessary liquidity and successful track-record to deliver for shareholders in FY21 and beyond.

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Motley Fool contributor Toby Thomas owns shares of Boral Limited. 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.

The post Why the Boral share price could be set for more growth in FY21 appeared first on Motley Fool Australia.

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When you ask most people what the no. 1 rule of investing is, they’ll probably quote you Warren Buffett’s famous line “don’t lose money”. Whilst this simple (if not slightly confusing) rule is great advice and is easy to remember, there’s another father of investing I want to talk about today. And that person is Benjamin Graham.

Ben Graham died back in 1976. However, in his day he was a masterful investor and was one of Warren Buffett’s mentors and even employers for a time. In 1949, he wrote one of the most famous books ever written on value investing – called (appropriately) The Intelligent Investor.

This book is full of wonderful investing lessons. But one lesson that stands out for this writer above others is Graham’s description of ‘Mr Market’.

Mr Market is described as every investor’s business partner, who is a fair businessman offering fair prices most of the time. But he does have trouble dealing with vicious mood swings, which can cause some irrationality. One day, he offers to sell you his share of a business at a stupidly high price. The next, he wants to buy your share for an offensively low price.

Graham points out that Mr Market isn’t offended by an investor taking him up on his offer or not. Regardless, he comes back day in, day out with a new offer. But he also points out that most investors don’t know how to deal with their mercurial business partner. They might panic when Mr Market offers them a low price for their share of a business, capitulate to their fears and accept Mr Market’s offer. Otherwise, they might offer to buy Mr Market’s share off him if he offers to overpay for theirs in turn.

Investing lessons from ‘Mr Market’

Now if you haven’t already figured out that ‘Mr Market’ is an allegory for the share market, then I apologise for being too subtle. But Graham’s lessons on Mr Market are as true today as they were back in 1949. As such, Graham’s no. 1 rule of investing (in my view) can be distilled into this: know how to deal with (and take advantage of) Mr Market.

In my view, the first goal of an aspiring investor should be to understand how this ‘Mr Market’ allegory applies when investing. It doesn’t take a lot of experience in the markets to see how true it is in so many ways. And understanding this parable is a sure way to put yourself on the path to successful investing. But the second goal should be to learn how you can use Mr Market’s temperament to your advantage. Financial markets like the share market run on human nature more than anything else. And they behave in a similar fashion today as they did in 1949. This is unlikely to change in the future, either, but if you understand this then you can use it to your advantage.

Foolish takeaway

So next time ‘Mr Market’ makes you an offer, you should think about whether its a fair or an emotional, mood-driven one. The best money you can make can be on the back of an emotional decision, but equally, these decisions can also be the most dangerous. Making sure you’re on the right side of that equation, again and again, is how investors like Buffett became so successful, and its how we all can follow in his (and Graham’s) footsteps.

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Motley Fool contributor Sebastian Bowen 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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The Kogan.com Ltd (ASX: KGN) share price has had an amazing ride on the ASX over the past few months. It has risen from $3.92 in mid-March to reach a new all time high of $14.29 in today’s trade. This was before pulling back slightly to its current price of $14.01 at the time of writing. 

This growth has been driven by a number of positive market updates, with Kogan successfully tapping in to market opportunities offered up during the coronavirus pandemic.

Earlier this month, Kogan successfully completed a $100 million placement. This capital will provide Kogan with the financial flexibility to act quickly on any lucrative future opportunities, in its quest to further expand.

So, with such a strong recent rise in value, does the Kogan share price still offer investors growth potential right now?

Sales and customers continue to climb

In its latest market update in early June, Kogan revealed that its active customers continue to climb higher. Customer numbers were up by 6.5% during May to a total of 2,074,000. For the fourth quarter to date, i.e., April and May, gross sales for Kogan soared higher by more than 100% compared to the prior corresponding period in 2019.

Kogan’s pipeline for new sellers in its Kogan Marketplace also continues to remain very strong. This is adding further fuel to help to increase the company’s strong sales momentum and, in turn, drive the Kogan share price even higher.

Due to COVID-19 lockdown restrictions, specialist online retail sites such as Kogan have seen a spike in online sales. In particular, there has been strong demand for home office equipment and accessories such as PCs and laptops. In contrast, many bricks and mortar retailers have suffered from a heavy decline in foot traffic. While some have managed to keep a portion of sales momentum alive through their supplementary online channels, for many the impact on their physical store channels has been significant.

Kogan also revealed in its June update that the company’s cash position remains very solid. It had $58.6 million of cash on its books at the end of May.

Is it too late to buy at today’s Kogan share price?

With such a massive share price jump over the past few months, the Kogan share price is definitely starting to look rather full. This is reflected in Kogan’s price-to-earnings (P/E) ratio which has now climbed to over 70.

While I wouldn’t be rushing out to buy Kogan shares at today’s price, I still believe the company is a reasonable buy for a long-term investment horizon.

I believe Kogan has created a solid foundation from which to tap into the rising demand for online shopping over the next decade. It has cleverly established a strong foot-hold in the local Australian market, upon which it can build over the coming years. Furthermore, the company’s expansion into a broad range of verticals provides sector diversification which can act as a buffer during different times in the investment cycle.

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Motley Fool contributor Phil Harpur owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. 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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