Business Irish

Monday 20 January 2020

Homebuilder shares in line for new year bounce - Davy

Ferry group Irish Continental may see a ‘Brexit bounce’
Ferry group Irish Continental may see a ‘Brexit bounce’
John Mulligan

John Mulligan

Shares in listed Irish companies from homebuilders to transport and recruitment firms are among those tipped by Davy Stockbrokers to perform well this year, as the 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 would probably benefit from a "Brexit bounce" and higher traffic volumes from the UK.

Recruitment group CPL Resources, Ires Reit and Greencoat Renewables should all continue to benefit from favourable regulatory tailwinds, meanwhile.

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Shares in Cairn Homes were trading at €1.28 yesterday, and have been as low as 95 cent in the past year.

Shares in Glenveagh Properties were changing hands for just under 89 cent yesterday, and have been as low as 59 cent in the past year.

Davy Stockbrokers believes the Irish economy will expand by 5pc 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 during 2019.

While Davy is predicting 5pc 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 indicated.

Irish Independent

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