A raft of stocks in Irish firms that were battered during 2018 by a market rout have been tipped as investment opportunities because of their exposure to a strong Irish economy and a prediction there won't be a hard Brexit.
Bank of Ireland, forecourt retailer Applegreen, Woodie's DIY owner Grafton, and hotel operator Dalata are all among the stocks perceived by Davy Stockbrokers as offering significant value.
It has based the predictions on its expectation that there won't be a hard Brexit and that the UK will remain in the European Single Market for the "foreseeable future".
The Irish stock market shed about 23pc of its value last year, wiping more than €21bn from its value.
Shares in Irish firms were pummelled by external factors including Brexit, but also by concerns about the underlying health of the Irish economy.
Some stocks were hit by company-specific issues. They included Ryanair, which spent the bulk of 2018 dealing with labour and union issues. Its shares fell more than 28pc last year. Paddy Power Betfair also faced challenges to its business, also sending its shares 28pc lower in 2018.
Davy Stockbrokers said yesterday that given the economic outlook for Ireland this year, weakness in many Irish stocks will provide "very interesting investment opportunities" in 2019.
Ireland's economy is expected to grow by 4.2pc in 2019, according to the Economic and Social Research Institute. That follows expected growth of 8.2pc in 2018. A recent EY-DKM report predicted that 60,000 net new jobs will be added to the Irish economy this year.
Davy expects the Irish economy to expand by 5.6pc in 2019.
"We also believe that many investors have taken too pessimistic a view on Ireland's point in the cycle - specifically with respect to the outlook for the housing market and bank lending," said Davy.
"A budget surplus will encourage a rise in government spending in infrastructure and perhaps more expansionary fiscal policy," it added.
"Overall, the backdrop looks very favourable for companies exposed to the Irish economy - particularly in housing and consumer-related areas."
It said that other stocks poised to benefit this year after being hit in 2018 include recruitment firm CPL Resources, ferry group Irish Continental, and homebuilder Glenveagh Properties.
"Earnings forecasts for the Iseq fell slightly for the full year while those for the top-10 stocks, which comprise over 86pc of the index, declined only marginally," noted Davy.
"Most of the fall in the market therefore was due to multiple de-rating as a consequence of the stock-specific and Brexit risks ... and in anticipation of a slowdown in the economy. We do not believe the pessimism on the domestic economy is justified," it insisted.