The fastest-growing economy of the European Union is set scale new heights. Touted to grow five times as much as Northern Ireland, the Republic of Ireland has gone from strength to strength in the past few years. With unemployment already near a 10-year low, the country has witnessed strength in its service sector as well as household spending.
Further, under tight labor market conditions, wages in the country have risen steeply. Taking such factors into consideration, betting on stocks from Ireland seems prudent at the moment.
IMF Chief Lauds Ireland’s Economy
On Jun 25, the chief of International Monetary Fund Christine Lagarde praised the Celtic tiger’s growth and performance in the last few years. Lagarde was speaking at Government Buildings in Dublin after her meeting with Taoiseach Leo Varadkar and the country’s Minister of Finance Paschal Donohoe.
She stated that Ireland has picked up from her last visit to the country as the IMF chief in 2013. While economic growth increased steadily from 1.6% in 2013 to 7.8% last year, unemployment fell from 14.6% to below 6% this year. Also, this announcement comes right ahead of the publication of IMF’s annual report on the Irish economy.
While praising Ireland’s economic resilience and prowess, Lagarde quoted John F. Kennedy in a bid to caution the country of international shocks. She said that “one should fix the roof when the sun shines,” advising the country’s policymakers to prepare for the “rainy day” as Brexit looms large.
Lagarde cautioned the country of “potential shocks whether they come from trade and financing costs.” However, she remained positive about the prospects of the economy.
EY Predicts Almost 5% Growth for the Celtic Tiger
Per the latest report by the financial accountancy firm, Ernst & Young on Jun 25, the Republic of Ireland is all set to witness GDP growth of 4.9% in 2018 and almost 4% in 2019. Further, the report states that an additional 236,700 new jobs would be added to the Irish economy through 2022.
The report also confirmed that 21 financial services companies have vested their faith in Ireland in the sense that they have vowed to move the majority of their operations from the UK to the Ireland following Brexit. Consequently, the report named Dublin as the most-popular business hub post Brexit.
Irish Service Sector Gathers Steam
Service activity in Ireland gained momentum in the month of May, staging a rebound after declining in the previous months due to harsh winters. Service activity surged to a four-month high in May. The Investec Services Purchasing Managers’ Index (PMI) increased to 59.3% in May from 58.4 in the previous month.
Also, growth in the level of new business from abroad hit a two-year high to settle at 59.5%. Such growth was achieved on the back of increased purchase orders from Britain.
4 Best Choices
Ireland’s growth in the past few years not only shows its resilience to the economic downturn in the EU but also makes it one of the most business-friendly destinations of the region. With the unemployment level near a 10-year low, higher wages and burgeoning service activity calls for investing in stocks from the country.
In this context, we have selected four stocks that are expected to gain from these factors. These four stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seagate Technology plc (STX - Free Report) is a provider of data storage technology and solutions to clients across the globe.
The company is based out of Dublin and sports a Zacks Rank #1. The expected earnings growth rate for the current year is 29.61%. The Zacks Consensus Estimate for the current year has improved 7% over the last 60 days.
Johnson Controls International plc (JCI - Free Report) is a designer and manufacturer of heating, ventilating, and air conditioning systems.
The company is based out of Cork and carries a Zacks Rank #2. The expected earnings growth rate for the current year is 8.1%. The Zacks Consensus Estimate for the current year has improved 1.1% over the last 60 days.
Smurfit Kappa Group plc (SMFKY - Free Report) is a manufacturer and distributor of paper-based packaging products.
The company is based out of Dublin and has a Zacks Rank #2. The expected earnings growth rate for the current year is 47.2%. The Zacks Consensus Estimate for the current year has improved 6.9% over the last 60 days.
UDG Healthcare plc (UDHCF - Free Report) is a provider of advisory, clinical, and packaging services to the healthcare industry in Ireland as well as across the globe.
The company is based out of Dublin and carries a Zacks Rank #2. The expected earnings growth rate for the current year is 25%. The Zacks Consensus Estimate for the current year has improved 4.2% over the last 90 days.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>