This week is the first week in September and the first of the “ember” months. Last week on our watch list we had the quintet of Premier Breweries, Caverton, FBNH, Diamond Bank and Flourmills Plc. Premier Breweries ended the week with a 31.6% pop, while Caverton dropped 5%. FBNH gained 2.3%, Diamond Bank on the back of the close of their Rights Issue lost 2.6% and Flourmills closed flat. It was a mix bag of returns which buttresses the volatility that was in the market all week.
This week we present the following quintet as out stocks to watch. [upme_private]
Seven Up – The company was included in our watch list a few weeks back and continues to remain so. It gained 5.7% at the end of the week and whilst the price looks like a moderate increase, it probably cost more to buy it in the market. The shares is scarce and difficult to buy in large quantity exceeding 5,000 units. As such, we still expect the price to gain at least another 5% this week. This is stock looks headed for N200 by the end of the year.
UBA – UBA made a 5.6% push this week owning to the announcement of Tony Elumelu as Chairman of the bank. He is now Chairman of two NSE 30 companies having been chairman of Transcorp for over three years now. The charismatic Elumelu promised higher returns for the company (even though he didn’t say how) but the market liked what they heard and reacted positively with a 5% pop in price. Is it likely to rise higher?
Guinness – The brewing giant informed the exchange that its board will be meeting thursday September 4 and expects to announce results September 8th 2014. Significant movements may begin with the stock this week as investors anticipate a results that shows the company is on track to improve shareholder value both in terms of earnings growth and higher dividend payouts. Guinness has returned a negative 25% in the last one year and -6.5% in the last one month. We feel the share price is overvalued even at this price (N185) and based on prior and our future expected earnings, so this result may either solidify our valuation or tick it up higher. We watch this stock keenly.
Okomu Oil Palm – This is a stock we like and the current price is beginning to look attractive. It dropped 5.4% last week to close at N34.5. This price falls within our buy range so we will be looking closely to see if the downward trend continues. The share price actually dropped below N34 this week as the relative strength index ticked closer to 32 before going up again to about 45. So we will be looking to see how demand and supply affects the price of the stock too.
Dangote Flour Mills – On August 27th about 33million units of this stock changed hands at a price of N7.5. Two days later close to 500,000 units exchanged hands pushing the share price lower by 6.6% to close at N7. The company has been on a downward spiral for the last two years as it continued to battle with dwindling profits and revenue growth. The share price should start to look attractive when it comes down to below N5. Why? Because, as far as turnaround goes I believe Tiger Brands have their plans well laid out and probably have the resources and personnel to turn things around for the troubled company. A leaner, more efficient Dangote Flourmills is recipe for capital appreciation. If Forte Oil could do it why not Dangote Flourmills?
Disclaimer: Stocks selected are based on our research and instinct. We do not claim to predict price movements or recommend any of these stocks. [/upme_private]
