Gross domestic product data for the third quarter not only confirm Ireland as the fastest-growing economy in the eurozone, but also show that it might grow faster than China this year, according to ING Bank analyst Anthony Baert.
Ireland's GDP expanded by 1.4% quarter-on-quarter in the third quarter, resulting in a slight acceleration of year-on-year growth to 7% -- from the 6.8% previously forecast -- the analyst said. Chinese economic growth is forecast at slightly below 7%, this year. Ireland's economy is now more than 7% higher than the peak it reached before the crisis, in sharp contrast with the rest of the eurozone, where many economies are smaller than before the crisis.
Ireland is "surfing on an investment wave from multinational companies, which boosts both activity today and structural growth in the longer term," said Baert, who predicts that the trend will continue. Investment added 1.1 percentage points to the country's growth.
How can investors take advantage of this fabulous growth? One way would be to get on board U.S. companies that are moving to Ireland as part of the "tax inversion" trend, to take advantage of the lower taxes, before the U.S. government bans the practice completely. And yes, I am thinking about Dividend Stock Advisor portfolio holding Pfizer (PFE) in that context, which recently merged with Ireland-based Action Alerts PLUS portfolio name Allergan (AGN).
But another way would be to just buy some stocks that would give them direct exposure to that fantastic Irish growth. Here are three ideas:
- Ryanair (RYAAY). This is the company that practically invented low-cost flying in Europe, only to be challenged by the likes of easyJet (ESYJY), who realized it can attract more customers by being nice to them, on top of selling them cheap flights. Ryanair is in the process of trying to link its short-distance routes with long-distance ones, and for that it is in talks with various airlines, including one in the U.S., according to a recent Bloomberg report. Global appetite for travel is slightly depressed following the Paris terrorist attacks, but with oil prices continuing to fall, airlines should still be in a sweet spot. Ryanair also stands to benefit from the recovery of the eurozone consumer, due to the European Central Bank's quantitative easing program.
- CRH (CRH). This building materials provider has its primary listing on the London Stock Exchange, but its headquarters are in Dublin and it was founded by the merger of two Irish companies back in 1970. While exposure to emerging markets, particularly China, might be a drag on the company right now, CRH is also active in the recovering eurozone and in emerging markets bright spot Central and Eastern Europe, as well as in the U.S. A report by Moody's predicts increasing demand for cement in the U.S. and the U.K. next year and a stable outlook for the European building materials industry.
- Fleetmatics (FLTX). The company was included among Deloitte's 500 fastest-growing technology, media and telecommunications companies in North America for the second straight year in 2015, and it has enjoyed robust growth in both revenue and income over the past three quarters. Trading at a forward P/E of 31.6, Fleetmatics is definitely on the dear side, but it is experiencing quarterly revenue growth of more than 21%. Real Money chart guru Bruce Kamich wrote last month that the stock's chart looks great and had a price target of $74 on it. That's more than 30% above the current stock price. The company's stock has been pulling back after hitting a new 52-week high of $62.86 three days ago, so investors seeking to get in could find this a good entry point.