Investor/An insider's guide to the market: The majority of Irish companies due to report financial results during the first quarter have now done so and, in general, results have been well up with market expectations. Over the past week building and construction-related stocks have been well represented with Ready- mix, Kingspan and market heavyweight CRH reporting results to the market.

Readymix, the smallest of these companies, is something of an oddity given that the Mexican multinational, Cemex, has a 62 per cent stake. It inherited this stake when it took over the British company, RMC. Readymix only operates in Ireland and the Isle of Man.

Operating profits for last year were down 3 per cent to €12.8 million, reflecting competitive pressures and higher energy, transport and raw materials costs. However, cash generation was very strong, in part due to the proceeds from the sale of some surplus properties.

Management stated that they were looking forward to a steadily improving financial performance in 2006. Better cost control and the positive demand outlook in Ireland (North and South) and in the Isle of Man is expected to generate significant profit growth in 2006. The shares are expensive when assessed in terms of their price/earnings ratio (P/E ratio), but the possibility of corporate action if Cemex decided to take full ownership will continue to support the share price.

Kingspan is a much more substantial company with a market capitalisation that is now just under € 2 billion. It announced stellar growth in 2005 with pretax profits up 40 per cent to € 135 million on total turnover of € 1.243 billion. The outlook for 2006 is good and Kingspan is capable of medium-term annual profits growth in the 15-20 per cent range.

Kingspan is a clear beneficiary of legislative and regulatory changes that are forcing the adoption of more environmentally friendly building methods. The company commands a leading position in niches such as composite panels, insulation boards, raised access floors and environmental containers. These are fast-growing niches and the medium-term growth prospects are very attractive.

Kingspan also owns Century Homes, which is the clear leader in the offsite residential timber frame construction market in Ireland. It has established a foothold in the UK and Kingspan is aiming to ramp up its penetration of this market. Kingspan's shares have been one of the market's top performers over the past year and they are now trading on a relatively high P/E ratio of 15. Therefore the shares may mark time in the short term but its medium-term growth prospects are sufficiently attractive to justify its premium rating.

Market heavyweight CRH did not disappoint the market this week when it revealed pretax profits of €1.279 billion, up 15.8 per cent on the 2004 outcome. Management's confidence in the future was underpinned with the strong 18.2 per cent increase in the dividend. CRH's American operations grew faster than its European business and now account for 51 per cent of operating profits. Growth of 20 per cent was driven by strong residential construction markets, positive infrastructural activity and recovering commercial markets. Despite the more subdued overall macroeconomic environment in Europe, operating profits grew by a respectable 7.4 per cent and accounted for 49 per cent of group profits. Management seems confident that Europe can continue to improve in 2006 and, in particular, its important Dutch operations are expected to benefit from improved housing activity and consumer confidence.

CRH's improved trading performance over the past year has been reflected in a strong share price performance. So far this year the shares have risen by 11 per cent and are 29 per cent higher than this time last year. After growing by 14 per cent in 2005, earnings per share are capable of growing by a similar amount in 2006. Organic growth and the successful implementation of an ongoing bolt-on acquisition strategy are likely to result in above-average earnings growth being maintained over the medium-term.

Because CRH's profits have grown rapidly over the past year its prospective P/E ratio has only expanded to approximately 13, which indicates that the shares still offer very good investment value. Several of its international peer group trade on higher multiples.

Lafarge is trading on a prospective P/E ratio of 14, whilst Hanson and Wolseley's share prices reflect prospective P/E ratio of 15.5 and 16.5 respectively.

The continuation of strong underlying building and construction markets both at home and abroad points towards further share price gains for both CRH and Kingspan over the remainder of this year.