This is shaping up to be a very volatile week for the Nigerian economy and Nigerian stocks as the markets react to the huge depreciation of the naira and politicians continue to heat up the polity with electioneering. As usual, Nigerian stocks will bear the brunt again with some gaining and others losing. We have identified the following stocks and those that we will be watching closely.
Julius Berger
The construction giant has had its share price hit its year low last week after it closed at under N45. The price looks attractive and portends potential upside in the short to medium term. Based on current events the stock is probably worth between N45 and N50 using conservative estimates. Post volatility, this stock should be worth N60 – N65 again.
Buy – Long term under N55, short term under N47
Dangote Cement
Dangote companies have come under immense sell pressures since the sell-offs began in late 2014. However, at a price of between N150 to N160 over the last two weeks, this stock now carries a 10-20% upside. Dangote Cement is one stock that has a knack for bouncing back when the market smells a rally.
Buy – Long term under N165, short term under N160
Guaranty Trust Bank
This stock hit a year low two weeks back when it traded under N18. That looked like a perfect time to take position as another round of volatility was sure to take the price higher. The stock closed last Friday at N21 a 17% gain already. We feel this stock is going nowhere else but down as another sell-off beckons
Buy – Long terms under N21, short term Under N19| Sell short term above N20
FBNH
The big bank is tethering on the edge of another new low and at N7.49 it was just 15 kobo off its year low. It could even drop to has low as N7 before the week runs out and if the sell-offs persist a price below N7 is not inconceivable. However, that in itself presents an opportunity for a potential upside.
Buy – Long term under N10, short term under N8
Access Bank
They are likely to commence their Rights Issue this week so it will be interesting to see how they price it. Last year they had planned to come out at N8.9 but that seems like an awful long time already. At a current price of N4.99 an immediate upside in price looks dicey. When UBA commenced its Rights Issue its share price blew past the right issue price of N4 before fizzling out and dropping below N4. Access Bank could see a similar effect so one needs to be cautious. There probably is a 10-15% short term upside on the current price.
Buy – Long term under N8, short term under N5
Others of note – NASCON, PZ, International Breweries, UBA, Custodian and Allied Insurance, Seplat
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