ABN-AMRO is steering investors towards smaller capitalised stocks where they state it is still possible to seek out good value. Since the adoption of the euro this year, smaller Irish industrial companies have suffered somewhat given the shift towards blue-chip stocks across Europe by the investment community.
ABN-AMRO defines a small stock as one with a market capitalisation of under #1 billion (£790 million) and accounts for all but the 10 largest members of the Irish Stock Exchange. In Europe there are 1,600 companies falling into this category.
These smaller stocks underperformed their main markets in Europe last year by as much as 17 per cent, while in Ireland that rises to 26 per cent. Much of this was due to dwindling appetite for these stocks and the brokers believe investors should use the opportunity to seek out good value.
Its recommendations include Grafton, Green, Jurys and Kingspan. It believes these stocks offer strong organic growth prospects, acquisition upside, the critical mass to attract investor attention and the potential to benefit from a recovery in the British economy.
