Construction giant Kingspan switches from worst to best stock as recession risk recedes

Kingspan has gone from last year’s worst-performing stock in the Iseq 20 index of major Irish stocks to this year’s best.

So far this year, shares of the Cavan-based maker of insulating panels for the construction industry are up 28.15 percent to €64.82 apiece.

The recovery is not enough to fully recover from last year’s huge decline, when Kingspan lost about 52 percent of its value, about 9 billion euros, amid fears that inflationary pressures and rising risk of recession would hit the company.

But the rise in Kingspan’s share price over the past five weeks has doubled the recovery in the broader Iseq 20 index of leading Irish stocks.

Davy Stockbroker analyst Florence O’Donoghue said that Kingspan’s market view of the sector, rather than company-specific news, is driving the stocks’ recovery.

“The rebound is in line with Kingspan’s international peers, including Rockwool in Denmark, where shares are up 24 per cent, albeit slightly ahead as there is more confidence in the outlook for the sector and the economy,” he said.

“The lack of bad news” in a context where many observers had feared the risk of a recession and a harsh downturn may have buoyed the sector, he said.

After hitting harder last year, Kingspan, of which Gene Murtagh is CEO, now appears to be recovering more strongly from a low base.

Kingspan’s insulated building panels are used worldwide in the construction of buildings that are increasingly being designed to minimize heating and cooling requirements in line with higher environmental standards and the pressure to reduce long-term operating costs.

Construction is typically one of the sectors hardest hit by a general recession. Increasing confidence that a global contraction is not on the cards now has propelled equities across the board higher year-to-date.

The Iseq 20, which suffered an overall decline in 2022, is up just over 15 percent year-to-date. In London, the FTSE 100 stock index recovered yesterday to its record high for the first time since 2018.

While the more domestically focused FTSE 250 index has fallen on signs the UK economy is lagging behind a broader recovery, the FTSE 100 is made up of larger, global companies that derive the majority of their sales outside of the UK.