Merrion Capital is recommending McInerney Holdings as a strong buy for investors at the moment. It advises that, with the shares trading at around €2.35, they have the potential to rise by 40 per cent to €3.90 within 12 months.

Rapid inflation in house prices in Ireland has been a significant factor in growth in earnings per share at the company over the past five years. Merrion notes that the company's management has been astute in its land purchases and the company now has sufficient land to continue building houses at the same rate as it did last year for almost 10 years.

Given that the cost of its land bank is significantly below current market rates, the company has insulated the growth in its operating profits from the effects of a stabilisation or softening in Irish asset prices over the medium term.

The company has the capacity to sufficiently increase volume on an annual basis to compensate for any margin pressure that may arise.

While investment of capital is currently aimed at exploiting the domestic residential opportunity in the Republic, the company is also expanding its Spanish leisure operations and its Irish commercial building division, as well as making small inroads into the British market. The focus for acquisitions is in Britain.

Merrion is also recommending CRH as a buy at €18.85. The shares have weakened recently, but Merrion says the outlook for organic growth at the company, combined with its successful formula, will continue to deliver good earnings growth. Any short-term weakness caused by technical factors should be viewed as a buying opportunity for investors, according to the brokers.