The market is losing ground today but some ASX shares are bucking the downtrend after brokers upgraded their ratings to "buy".
The S&P/ASX 200 Index (Index:^AXJO) slumped 0.7% during lunch time trade with just about every sector losing ground.
However, the CSR Limited (ASX: CSR) share price is defying the gloom to jump 2.9% to $5.76 – a more than 10-year high.
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Building to an ASX share "buy" upgrade
The positive outlook for residential construction is one driver for its outperformance. But an upgrade by Macquarie Group Ltd (ASX: MQG) is also probably helping.
"While the recovery from COVID-19 in health terms may well come in fits and starts, the earnings cycle for stocks seems well supported in the near term," said the broker.
"Longer-term concerns around the lack of migration and its impacts on sustainability are likely less pertinent to the investment thesis, especially in 1HCY21."
Macquarie lifted its earnings per share (EPS) forecasts for the sector to above consensus, and it believes the upgrade cycle has not yet run its course.
The broker changed its recommendation on the CSR share price to "outperform" from "neutral" with a price target of $6 a share.
Earnings remodeling
But CSR isn't the only ASX stock that is leveraged to the positive housing activity outlook. The big jump in renovations prompted Macquarie to also upgrade the GWA Group Ltd (ASX: GWA) share price "outperform" from "neutral".
Shares in the household fittings group surged 3.6% to $3.62 at the time of writing.
The broker noted that alterations and additions (A&A) approvals increased by 29% in the December 2020 quarter compared to the same period in 2019.
This is probably thanks to the federal government's HomeBuilder grant. A&A accounts for more than 60% of GWA's revenue.
Building approvals for detached housing also increased by an eye-watering 42% in the quarter compared to 4QCY19.
A&A and detached activity are expected to remain elevated for a while yet. The broker's 12-month price target on the GWA share price is $3.90 a share.
Attractive package
Finally, the Amcor CDI (ASX: AMC) share price got upgraded by UBS to "buy" from "neutral" following its first half profit result.
Shares in the packaging company fell 3.4% to $14.52 at the time of writing, but the AMC share price jumped 4.5% yesterday on the earnings news.
Amcor posted results that were ahead of the market's and UBS' expectations, thanks largely to organic growth and its Bemis acquisition. Management also upgraded its FY21 guidance to above consensus.
"We are attracted to Amcor's leading position across key global consumer packaging markets," said UBS.
"The defensive nature of these markets is clearly supporting Amcor's earnings base and cash flows despite COVID-19 related uncertainty.
"We think this earnings resiliency and growth outlook, combined with a solid dividend yield of c.4% should support the stock."
UBS' 12-month price target on the AMC share price is $16.60 a share.
