Invest in Iceland’s recovery - buy these three stocks

Each week, a professional investor tells MoneyWeek where he'd put his money now. This week: Olafur Olafsson, chairman, Samskip.

Waves of celebration were felt across Europe last week as a successful Greek government bond sale sparked a rally in other peripheral' countries' debt markets. Investors should turn their attention to the northern periphery of Europe, however, as Iceland continuesits recovery from its collapse in 2008.

The resurgent country recently posted its seventh straight quarter of growth, an achievement that puts the Greek recovery into perspective.

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Since the crash, unemployment in Iceland has halved, exports are up and the nation's deficit (the gap between government spending and the tax take) is down to just 1%. With opportunities in several sectors, now is the time for foreign investors to return to Iceland.

The small Nordic nation of 300,000 people is abundant in natural resources, with vast reserves of energy. It has geothermal and hydroelectric power and plans to connect with northern Europe's energy grid through undersea cables, exporting to Britain, the Netherlands, Norway and Germany.

Iceland today offers a benign environment for investors, domestic entrepreneurs and foreign businesses. With a legal system based on Denmark's, it boasts a well-educated, skilled, flexible and relatively young labour force (67% of the population is aged between 15 and 64), low corporate taxes, and a strategic location between Europe and America.

Approved investment projects can benefit from lower tax rates as well as customs and excise duties exemptions on importation or the purchase of capital equipment for the project. The new government has made foreign direct investment a priority, boosted by policies to diversify the economy.

Iceland is known for its thriving fishing and logistics industries, which are set to benefit from higher prices caused by a global fish shortage. HB Grandi (Reykjavik: GRND), Iceland's largest fish quota owner, is being listed on the stock exchange this month and gives exposure to a well-diversified fish-catching firm that runs many vessels and processing plants.

The company is particularly attractive as the UK is the primary market, receiving fresh fish from HB Grandi on a daily basis.

With tourism also flourishing, we recommend Icelandair (Reykjavik: ICEAIR), Iceland's premier airline. After four years of restructuring, the company is now highly profitable and growing rapidly. It capitalises on a unique route network connecting Europe and the US, so benefits from people visiting Iceland and from transatlantic traffic.

A third way to profit from Iceland's growth is through VIS Insurance HF (Reykjavik: VIS), the country's top provider of non-life insurance services. The company has broad exposure to the nation's households and companies and a diversified investment portfolio that gives good exposure to the Icelandic investable market.

While there are plenty of signs of growth, more work needs to be done for the Icelandic recovery to be complete. The last few years have been challenging, with the banking sector still recovering from its systemic collapse at the start of the financial crisis.

That said, it is encouraging to see more and more companies being listed on Iceland's stock market, giving local and foreign investors ample opportunity to participate in the recovery. After much soul-searching, the economy's foundations are robust again and opportunities in new and exciting sectors have much to offer for the bold.