Merrill Lynch recommends CRH as a stock investors should consider buying at the moment. The brokers' recommendation follows higher than expected results from the group and a favourable outlook.
Looking at the group's profit margin and factoring in the current level of the euro against the dollar, Merrill Lynch is preparing to increase its forecasts for CRH by between 6 and 10 per cent.
Improvements in the group's performance was mainly achieved in Europe, including the UK, Scandinavia and Ireland. The US out-turn was broadly in line with forecasts, while sales were 6 per cent ahead of expectations.
Merrill Lynch says that, if fears of a sharp slowdown in the US economy are receding, CRH's share price should recover some of its deserved but recently reduced premium against the sector.
The brokers is also highlighting Royal Bank of Scotland as a good bet for investors. The Scottish bank took over NatWest earlier this year in a deal which includes Ulster Bank.
Merrill Lynch says Royal Bank of Scotland looks undervalued at current market levels and is reiterating a long-term buy rating, setting a 12-month price target of £16.50 sterling.
It notes that the integration of NatWest's operations continues on track, offering the company strong earnings momentum. In terms of positioning, Merrill Lynch believes Royal Bank of Scotland is the best placed of the domestic British banks. It is one of a select group of European banks which offers a solid mix of strength in innovation, consolidation skills and traditional profit maximisation, it says.
