Still in the financial sector, Cork-based stockbrokers W&R Morrogh recommends Irish Life & Permanent as a "low-risk buy" for investors. The stock looks particularly attractive, particularly after its takeover of TSB Bank, it states. "While we have been bearish towards all Irish financial stock since mid-1999, the factors that have sent them lower now seem to be easing and we feel the outlook for the sector is positive for 2001."
W&R Morrogh says Irish Life & Permanent's share price has broken out of its downward range towards the end of August and has made meaningful gains since. The firm's growth is being driven by Ireland's buoyant life market.
Things were different at the mainly mortgage-focused Irish Permanent banking operation, which accounts for 20 per cent of profits. But despite lower margins, demand for mortgages remains strong. Its purchase of the TSB gives the bank access to the clearing system and its 300,000 customer base.
From a technical perspective, W&R Morrogh believes the shares have clearly undergone a U-turn and should progress well.
The company's share buy-back programme is improving its return on capital and makes the shares look cheap, according to the brokers. On a cautionary note, it warns the shares may come under pressure as it beds down the TSB acquisition.
