Shares in Irish firms set to do well thanks to booming Republic
Shares in listed Irish companies - from home builders to transport and recruitment firms - are among those tipped by Davy Stockbrokers to perform well this year as the Republic of Ireland's economy continues to grow.
It said that homebuilders Glenveagh and Cairn remain "deeply discounted" relative to peers, and that with their output continuing to increase, both stocks should benefit.
Davy added that hotel group Dalata and ferry operator Irish Continental will probably benefit from a "Brexit bounce" and higher traffic volumes from the UK.
Recruitment firm CPL Resources, Ires Reit and Greencoat Renewables should all continue to benefit from favourable regulatory tailwinds.
Shares in Cairn Homes were trading at €1.28 (£1) yesterday, and have been as low as €0.95 in the past year.
Davy Stockbrokers reckons the Irish economy will expand by 5% in 2020.
"Ongoing foreign direct investment and a resurgent consumer are just two of the factors likely to drive this growth," it said in a report published yesterday.
It added: "Improving Government finances, combined with a general election likely in the first half of the year, augur well for good growth in infrastructure spending and housing in particular."
Davy said that while Ireland was one of the best performing equity markets in 2019, those stocks most exposed to the domestic economy generally underperformed the market and their European peers.
"The impact of regulatory and legislative measures to reduce the risks of the Irish economy had a negative impact on earnings forecasts," according to the stockbroker.
It said that these issues, combined with Brexit uncertainty, weighed on those domestically focused listed companies in 2019.
And while Davy is predicting 5% economic growth this year for Ireland, it stressed that there is an "enormous upside risk" to the projection as a result of the OECD's package of BEPS tax reforms.
They could see more intellectual property shifted to Ireland, boosting exports and corporate tax revenues, Davy said.