IT was another bumper year for Irish equities in 2005. The Iseq index rose by 17% during the period, following gains of 26% in 2004 and 23% the previous year. The index is now about double the low point reached in early October 2002 and Davy recently predicted that the Iseq could reach 8,500 this year, indicating growth of 18%.

The main movers last year included the Jurys Doyle hotel group, which was subject to a lengthy takeover battle, and C&C, which successfully launched Magners cider in the UK. Kingspan also rewarded punters in a year that saw it buy the Monaghan-based house builder Century Homes. The main laggards were: Elan, where concerns over Tysabri affected investor sentiment; Waterford Wedgwood, which was dogged by weak sales in America; and Iona Technologies, which issued a profit warning in the middle of the year.

The Iseq has outperformed the overall European market in all but two years since 1992, making it one worth tracking this year. We asked two leading stock market analysts to give us their tips for 2006.

The experts below have been selected for their skills in a number of investment areas. They, or the funds they manage, may hold shares in the companies or sectors discussed.

Brian Carey

There are probably two stand-out recovery plays on the Dublin market: Waterford Wedgwood and Iona Technologies.

If Peter Cameron, the new Waterford Wedgwood boss, can get crystal and ceramic sales moving in the right direction, the upside could be very large. Break-even is targeted for March 2007, but real concerns linger over the extent of group debt. There is not a lot of leeway on interest cover, and that ratchets up the risk side of the equation.

Software company Iona is more of a transition than a recovery story, and therefore represents a safer bet. It has a large customer base, a good reputation in the marketplace, and experienced management. It is also dirt cheap, and stronger results from a peer, Tibco, may mark a turning tide of sentiment.

The software operations have to be worth more than €38m, which is the value attributed to the business by the market. The firm has cash of €53m and is a potential takeover target; both factors offer comfort.

Ciaran Hancock

After a few roller-coaster years, Elan comes with a large health warning attached. It is not for the faint-hearted, but it could be the stock that delivers for Irish investors in 2006.

Its multiple sclerosis drug, Tysabri, being developed with Biogen, has once again been given priority status by America’s Food and Drug Administration (FDA) for a further review. Analysts say it could be cleared to return to the US market by late March. This would be a shot in the arm for the stock and wipe away the bad memories of 2005, when Tysabri was withdrawn after concerns emerged about possible side effects. Elan seemed doomed at that point, but it has gradually recovered. It also has a potentially exciting Alzheimer’s drug in the pipeline.

At €11.15 Elan is well off its €29 high in 2005, but that was before Tysabri hit a speed bump. It is likely to take a breather in advance of further news from the FDA, which could represent a good buying opportunity.