Just because a stock is Irish it doesn’t mean that we should think of it as a loser, even if it’s an Irish bank stock. Ever since AIB started dropping below the $2 level back in August for known reasons, the market confidence in the Irish banking sector quickly deteriorated, and started punishing banks with solid fundamentals, such as the Bank of Ireland.

IRE is currently trading at $2.63, with a P/E of just over 8. Even in the deepest economical crisis that Ireland has seen since 1967 (so much for the summer of love), the Bank of Ireland managed to remain on its feet, although losses for the first half of 2010 were about $6/share. Investors have to respect that, and they do…

After the stock dropped to a historical low of $1.38 near the end of November (from a high of $10.57 back in April), it rebounded to $3.04 in a couple of weeks, which is over a 100% gain. Not only that, IRE has a very short ratio, which means that investors think that the stock is currently extremely undervalued, and there is little chance that it’s going to drop further.

IRE is not AIB, and should not be treated as such. I think of AIB as a gamble (I thought likewise of IRE, but not anymore), but IRE is definitely a good investment (just compare the performance of the two stock for the last month to see what I mean). I think the stock can easily jump to the $4 level within weeks if the financial situation in Europe remains calm.

Let’s see what 2011 is holding for the PIIGS…