Top 2017 stocks: Investec upgrades CPL shares to ‘buy’

Investec analysts in Dublin upgraded their view on recruitment firm CPL's shares to buy on Wednesday as they included companies ranging from Dalata Hotel Group to ferries operator Irish Continental Group among their top Irish stock picks for 2017.

Ireland's largest private-sector landlord Irish Residential Properties Reit, builders' merchants and DIY retailer Grafton Group and convenience food company Greencore are also included in Investec's list of preferred Irish small to medium-sized companies.

The brokerage's large-cap picks include Bank of Ireland, building materials giant CRH, bookmaker Paddy Power Betfair, Ryanair and paper packaging company Smurfit Kappa.

Investec said its favourite Irish companies are those that "we believe can deliver growth while also offering attractive valuation level," adding that the Iseq's 4 per cent decline last year, the first since 2010, was due to "overplayed" concerns that Brexit would knock Ireland off its growth path.

State debt agency sells target-beating €4bn in bonds

---

Bull market for European stocks, as 2017 Iseq trading opens

---

Dollar hits 14-year high after strong US manufacturing data

---

NTMA plans to raise up to €3bn from 20-year bond sale

---

By comparison, the FTSE 100 surged 14.4 per cent last year to record levels, while the Dax in Germany gained 8 per cent and the S&P 500 in the United States jumped 13 per cent.

“For 2017, our economists expect global and US growth to accelerate,” Investec said. “Closer to home, we estimate Ireland can achieve 3.4 per cent gross domestic product growth in 2017, outperforming the EU for the fifth year in a row.”

Underperformance

The CPL stock upgrade follows a recent bout of "underperformance despite being ideally positioned to benefit from buoyant Irish employment growth," it said.

Among large caps, Bank of Ireland “represents a highly geared play on a continued Irish macro recovery,” it said, adding that rising bond yields internationally will boost the lender’s profitability and reduce its pension deficit.

CRH, which generates about 55 per cent of its operating earnings in the US, is "ideally positioned" to benefit from a planned surge in infrastructure spending by the incoming administration of Donald Trump.

“While we still lack significant detail on Trump’s infrastructure plan, we estimate that in a bull case scenario we could upgrade our 2018 EPS [earnings per share] forecast by 16 per cent” for CRH, Investec said.

At the other end of the spectrum, Investec has a sell recommendation on Tullow Oil shares, which surged by almost 89 per cent last year in line with rising fuel prices.