Liams Last Post : Happy New Year , CRH statement looks OK , market reaction presents an opportunity...

Good Afternoon

 

Happy New Year to you and lets hope that 2010 is a year when stock selection skills come to the fore again and the dash for trash is over and investors differentiate themselves by their stock selection.

 

The first big news story from Ireland cae today , it was the CRH trading and development spend update. The stock reacted negatively and closed down -3.5% having been down by more than 4.3% at one stage. There was nothing in the statement to panic investors , I suspect that the sell off was driven by a bout of profit taking post the pre christmas rally. The outlook statement was not terribly positive but it was not incrementally more bearish as had been feared. Merrion are likely to finalise a 2% to 3% upgrade to our forecasts for 2010 and keep our 2009 full year numbers unchanged. CRH is part of our Preferred stock list and so the news today certainly helps underpin our positive view on the stock and BUY recommendation. I suspect that when the consensus gets upgraded that the stock will rebound. CRH has spent most of the last year in the sin bin after raising money to fund acquisitions and then sittin gon the cash for most of the year. Indeed It looks more like a defensive issue in hindsight as earnings estimates basically halved for CRH in the months post the rights issue. However now the point is that the valuation is attractive , they are demonstrating a commitment to taking out costs and more than they had initially flagged and are now on the acquisition trail again. Definitely time to take advantage of the price pull back and add to positions here. 

 

We have just heared that Grafton will have a trading update in the morning , It is not expected to be controbversial as the company is presenting at a New York Conference and likes to make sure that it has communicated with the arket in advance.  

 

We get Ryanair news later in the week. The rally here must leave this one ripe for profit taking. it looks expensive here compared to all iuts peers and there is little prospect that I can see of a major positve earnings surprise to justify the recent rally.  
 

Welcome Back

 

Have a good evening

 

Liam

 

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