A feature of many stock markets over the past six months has been a resurgence in the share prices of companies whose fortunes are closely tied to the economic cycle. Many of these shares had played second fiddle over recent years both to growth companies in the technology and pharmaceutical sectors and to financial stocks.

Now the turnaround in the Asian economies is leading to greater optimism concerning global economic growth and this has been reflected in increased demand for basic industrial materials.

Commodity prices have already begun to rise and crude oil prices are now almost double their level at the start at the year. Not surprisingly, the share prices of oil companies have been amongst the strongest performing stocks so far in 1999.

In the Irish market, industrial shares have had a mixed experience in recent years. In particular, the share prices of Smurfit and Waterford/Wedgwood suffered from sharp declines in the wake of the Asian crisis last year.

Since then they have recovered some of the lost ground, but their share prices have still not regained previous peaks. However, the performance of CRH, the Irish market's largest industrial share (until the Telecom IPO), stands in sharp contrast to that of its industrial peers. The company's shares did fall quite sharply during the market turmoil of last year, but have since climbed and exceeded their previous price peaks by a substantial margin.

Additionally, CRH continued to produce steadily rising profits even when many of its international peers were finding it difficult to maintain their profitability.

CRH's successful corporate strategy now means that it is one of the most highly rated companies within its international peer group. At its current market price the shares stand at a price-earnings ratio of approximately 19, whereas the majority of its European peers have a price earnings ratio which ranges between 15 and 18.

The company's recent €400 million (£315 million) acquisition of Thompson-McCully in Michigan has been well received by the market. However, another announcement by the group regarding bolt-on acquisitions in the first half of the year highlights just how active CRH is, on an ongoing basis, in terms of acquiring new businesses.

A feature of CRH's long-term strategy has been its ability to acquire privately-run companies at very attractive valuations. The recent announcement by the group emphasises that bolt-on acquisition activity remains a critical feature of the company's long-term development.

In the first six months of 1999, CRH acquired a total of 18 smaller businesses at a total cost of £183 million (€232 million). The majority of these acquisitions were in the US, although one of the more significant acquisitions was in Eastern Europe where the company acquired Podilsky Cement, which is one of the leading cement manufacturers in Ukraine. CRH already has a presence in Poland and, together with this recent acquisition, it provides the company with a platform to grow in Eastern Europe over the long term.

Of course as well as its extensive international operations, CRH is undoubtedly continuing to benefit from the rapid growth of the economy. In the medium term the obvious need for major infrastructural investment in the Republic leaves the company well placed to continue to grow in its home base.

Even at its current lofty valuation the shares look likely to continue to deliver good long-term returns.