After months of losing out to the more fashionable financial stocks, industrial shares may at last be showing signs of returning to favour.

Goodbody Stockbrokers is recommending an overweight stance in industrial companies as it believes that many of these stocks offer good value and the summer weakness represents a good opportunity to buy.

Among the bigger stocks, its preferences include Elan which Goodbody believes is now poised for its "third wave of growth". The acquisition of Neurex and the expansion of Elan's direct marketing effort are expected to be the twin drivers of growth. Goodbody is forecasting earnings per share growth of 25 to 30 per cent per annum over the next three years, while Elan is expected to reach its target of $1 billion (£704 million) in turnover one year early in 2000.

It also recommends CRH because of its continuing strong industrial earnings growth and the fact that it is still well off its highs. Other recovery plays among the industrial stocks include Waterford Wedgwood, Greencore and Smurfit, Goodbody says.

"Most of the other leading industrial stocks have now come well off their highs and are at levels where we believe the downside risk is small in view of good earnings momentum," the broker says.

Meanwhile, ABN Amro has said that while a significant recovery may be some time away for Smurfit, the stock is close to bottom and offers value for those with a longer-term perspective. Smurfit is also trading at a significant discount to its US peers and for the first time, it is also at a discount to the European sector.