Post-Tiger Ireland Has Plenty of Small Caps to Consider

The housing bubble that damaged the U.S. economy pales in comparison to the one facing Ireland.  More than 200,000 housing units sit empty in a land of 4 million people. An economy that posted double-digit growth during the height of its boom is likely to shrink by as much as 7 percent this year. And Ireland’s first true skyscraper, named after the Isle’s most famous export, U2, sits in the planning stages. http://www.boston.com/news/world/europe/articles/2009/03/15/celtic_tiger_lies_wounded_bleeding/

Even if the Celtic Tiger is not roaring now, still some solid biotech, software and financial firms can be found for the long term. And so on this St. Patrick’s Day we recognize a few Irish small caps that have a chance to at least purr, if not roar, as the clovers settle.

Dublin-based Babcock and Brown Air Ltd. (NYSE: FLY, www.babcockbrownair.com) leases commercial aircraft to airlines around the world. The Company earned 28 cents a share in 4Q of 2008, more than double its number (13 cents) for 4Q 2007. The Street expected 36 cents and was unimpressed. The stock trades at $4.52 off its 52 week high of $16.94, above its low of $2.50. High expectations are not necessarily a bad thing and the company has lots of cash on hand. Yesterday, it successfully repurchased $100M of its debt at a considerable discount to par value.

Icon (NasdaqGS: ICLR, www.iconclinical.com) runs clinical trials for the pharmaceutical, biotech and medical device industries nationwide. It announced 2008 growth in operating income of 44% and EPS of 38%. Despite this impressive growth, at $17, it trades just off its 52 week low of $15.57 and far from its $45 high. Forbes featured it in an article that looked at 5 international stocks that “looked cheap.”

http://www.forbes.com/2009/02/09/investing-stocks-international-personal-finance-investing-ideas_0209_streetwalker.html

Warren Buffett bet wrong on Irish banks this past year and lost big. If you like the prospect of making money where the Oracle lost it, take a look at Allied Irish Banks (NYSE: AIB, www.aib.ie). It trades at $1.42, off of its 52 week high of near $46. Its stock chart resembles that of the U.S.’s biggest banks and similarly, it got government cash – a $3.5B loan from the Irish government in return preferred shares paying 8%. The bank continues to lose money as bad debts soar. It has plenty of risks and an entry point here would suggest you think a bottom has been reached, more or less. But at least it is showing some discipline again. Allied now requires a minimum deposit of £50,000 for which it will pay a paltry ½ of 1 per cent interest. This cheap money got banks in trouble to begin with but now it is the key to their survival.

http://www.ft.com/cms/s/0/75555604-1261-11de-b816-0000779fd2ac.html?referrer_id=yahoofinance&ft_ref=yahoo1&segid=03058

Trintech* (Nasdaq: TTPA, www.trintech.com) is in the GRC space (Governance, Risk management and Compliance software). It has over 600 customers in every industry niche imaginable, including such stalwarts as 7-Eleven, Accenture, Allianz Life North America, Ameren, Bank of Nevada, eBay, Farmer’s Insurance Group, Kinder Morgan, Regal Entertainment, Rohm and Haas, Sears, UPMC, Verizon Wireless, Wyndham Worldwide, and YUM! Brands Restaurants. As a friend to the compliance officers of the world, Trintech is one company not stressing a future of increased regulation. Its software provides a dashboard view of a company’s finances along with action plans and control hierarchy that make sure the right people are doing right things at the right time.

*client of Allen & Caron, publisher of this blog

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