In its Irish equity outlook 2007 Goodbody Stockbrokers have handpicked ten companies to invest in next year.
On the economy, the stockbroker expects GDP growth of 5.6% next year, the highest rate of growth since 2002. Goodbodys says the Irish economy will continue to outpace the EU next year and in 2008.
The outlook forecasts euro zone growth to slow from 2.6% in 2006, to 2.2% in 2007.
However, the stockbrokers warned that the construction sector has become increasingly vulnerable to a slowdown in residential building.
The outlook predicts that inflation is likely to average 3.9% for 2006, but if interest rates and energy prices were excluded then prices would be increasing at an annual rate of 2%.
The outlook says there was some evidence of a slowdown in consumer spending - though figures for Q3 were not yet available.
Last week a report from Davy Stockbrokers predicted another year of 'exceptionally' strong economic growth with growth of 5% next year, before a significant slowdown in 2008.
Goodbody says earnings growth at AIB is likely to outpace the banking sector over the next two years, and the ongoing success of the Irish economy will support its growth.
It says Anglo will show 21% growth in earnings per share over the next two years. Goodbody says Grafton will grow EPS of 11% next year.
The outlook said recruiter CPL will grow EPS by 70% over the next three years. The stockbrokers said services company Newcourt will grow EPS by 90% in the year to the end of February.
The broker predicts that C&C, Ryanair and Kingspan will offer 'growth at a reasonable price'.
Goodbody expects C&C to show growth of 90% next year and a further 30% in 2008.
Goodbody said Ryanair shares will be helped along by lower fuel prices, and Kingspan offers investors good exposure to the green economy, and that the firm has potential.
Goodbody names CRH and Glanbia as good value stocks.
