Food for thought to fuel a recovery
Lucinda Creighton, Politician
Published 26/12/2010 | 05:00
I'M not much of a wheeler and dealer when it comes to the stock market -- but I do keep a keen eye on the business pages, so here are my predictions for 2011.
My first pick is not an obvious one for a TD representing a Dublin constituency but Glanbia Plc is one to watch for next year and beyond. Efforts to sell the group's dairy business to a co-op of farmers who own 54 per cent of the plc collapsed in May when the farmers failed to get 75 per cent of their shareholders to accept the deal worth €350m.
However, Glanbia seems to be still keen to sell its Irish dairy arm to concentrate on its international business, which boasts higher profit margins. Glanbia's openness to a deal to offload its dairy operations, coupled with the expected expansion of the dairy sector, could make it an interesting choice.
The share price of Aer Lingus has grown steadily but slowly since the summer and the company is expected to return to profit in 2011. The reduction of the travel tax and an expansion of its summer 2011 schedule would also suggest potential for growth.
The Grafton Group, which is behind well-known DIY outlets, recorded strong UK sales in the last month and strong third-quarter profitability figures. Any upturn in the UK housing market could lead to increased sales there, which should be reflected in the share price here.
The Cavan-based insulation specialist Kingspan expects profits for 2010 to be in line with last year. A deal to buy CRH's European insulation business is due to be completed early next year and should reinforce its position in northern Europe. Demand for insulation panels remains particularly strong, as governments in many countries incentivise retrofitting.
CRH is the expensive option but one of the best performers on the ISEQ. A jump in pending house sales in the US led to increased confidence in the share price last month. It also has plans to strengthen its position in the German market next year.
Dragon Oil shares have been threatening to pass the €6 mark at year's end. The company plans to increase production by 5 per cent this year and drill 40 new wells by 2013. A rise in oil prices, coupled with an increase in production, could see the price pass the €6 mark in 2011.
Finally, a new Government will also increase the confidence of the markets!