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FINANCE Survey: equity favourites for 2006 Back  
The Irish stock market will continue its recent tremendous growth, and is set for double-digit growth in 2006, say Ireland’s leading stockbroking analysts, as voted in the 2005 FINANCE Stockbroking Survey.
AAIB, Bank of Ireland, the Grafton Group and IAWS are some of the names to watch in 2006, according to a survey conducted by FINANCE amongst Ireland’s leading stockbroking analysts to identify the stocks ready for growth in 2006.

The analysts, which were voted, in 2005’s FINANCE Stockbroking Survey as being the top analysts in their sectors, submitted their forecasts in early January, and since then, there has been no appreciable change in share prices. (For reference purposes, the results of the Stockbroking Survey which polled over 1000 fund managers both international and domestic are found at www.finance-magazine.com.

Robbie Kelleher, head of research at Davy Stockbrokers, writes that, ‘Overall ratings in the Irish equity market are a little lower than those in Europe and earnings growth is expected to be a little quicker… we believe the Irish market can at least match the performance of Europe in general and we have set a target of 8,500 for the ISEQ for the end of 2006’.

In food and beverages, Merrion Capital’s Robert Brisbourne, who was also voted ‘Analyst of the Year’ in the FINANCE Stockbroking survey, picked C&C Group and IAWS as his favourite stocks going into 2006. Although IAWS had a relatively weak share price performance in 2005, Brisbourne says that this was primarily the result of a very strong performance in late 2004, and a relatively high valuation at the start of the year. He says that IAWS is now well placed to deliver good shareholder returns in 2006.

In the financials sector, the outlook is bright, with Goodbody’s Eamonn Hughes recommending that AIB, Bank of Ireland and Anglo Irish Bank are all ‘buys’. ‘AIB probably represents the best Irish play on both the resurging Irish consumer and the buoyant commercial sector, particularly commercial property lending,’ says Hughes.

However, Hughes has a ‘reduce’ recommendation on Irish Life & Permanent, since he thinks it has already priced in many of the SSIA related gains, but has an ‘add’ on both FBD and IFG.

Goodbody’s Robert Eason favours the Grafton Group in the buildings and construction sector, which, he says, ‘underperformed in 2005 due to negative sentiment towards the UK merchanting/DIY sector that arose from a slowdown in the market’. However, ‘with Ireland likely to remain one of the strongest European economies in 2006 and the prospect of a more stable UK merchanting market (underpinned by further interest rate cuts and improving trends in both housing transactions and mortgage approvals), Grafton is well positioned to outperform in 2006,’ he adds.

The outlook is bright for mid-caps, says Merrion’s John Mattimoe, ‘with quality Irish mid-caps projected to continue to deliver further robust earnings growth, valuations are now more attractive again, indicating potential for good returns in 2006’.

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