The Nigerian Stock Exchange (NSE) closed January up at 15.95%, buoyed by improved macroeconomic fundamentals and renewed interest from foreign investors. To date, the All-Share Index is up 16.73%. Here are a few stocks which could witness significant price appreciation this month, as well as some that are not performing so well.
Stocks to buy
Tier one banks have taken a back seat in terms of price appreciation this year, but Zenith still has room for a bit of upside compared to GT Bank.
Interest income for GT Bank increased from N181 billion in 2016 to N248 billion in 2017. Earnings per share increased from N4.11 in 2016 to N4.14 in 2017. GT Bank closed at N49 per share on Friday’s trading session.
Zenith’s results for the 9 months ended September 2017 show gross earnings increased from N527 billion in 2016 to N531billion in 2017. Earnings per share also increased from N3.03 in 2016 to N4.11 in 2017. Zenith closed at N31.95 on Friday’s trading session.
While Seplat’s 9 months ended 2017 results are still in the red, the losses have reduced drastically. Revenue has also increased For the 9 months ended September 2017, revenue increased from N49 billion in September 2016 to N85 billion in September 2017. The company also made an operating profit of N16.2 billion in 2017 compared to an operating loss of N13.1 billion in the comparative period of the prior year. Losses also fell from N24 billion in 2016 to N1.6 billion in 2017.
The company last year restructured some of its loan obligations and resumed crude oil exports from the Forcados terminal.
Year to date, Seplat is up 9.40%, underperforming the All Share Index, as well as other companies in the oil and gas sector.
Custodian Insurance typically trades within a tight band of N3.00 to N4.00 but has broken out due to bullish market sentiments. At its current price of N4.28 in last week’s trading session, the stock is trading at 5.5 times its earnings.
Results for the 9 months ended September 2017 show that gross revenue increased from N27.1 billion in 2016 to N31.8 billion in 2017. Profit before tax also increased from N5.1 billion in 2016 to N6.0 billion in 2017. Earnings per share also increased from N0.66 in 2016 to N0.76 in 2017.
Investors may have decided to overlook the stock in 2017 due to the dilutive effect of its rights issue. Proceeds of which were used to repay loans from its parent company. The company has however returned to profitability
For the 9 months ended, September 2017, revenue increased from N161 billion in 2016 to N223 billion in 2017. From a loss of N40 billion in 2016, the company made a profit before tax of N1 billion. Earnings per share have also bounced back to N0.10 from a loss per share of N8.27 in 2016.
Stocks to sell
Skye Bank closed Friday’s trading session at N1.43, up 186%. The impressive return mirrors that of other tier-two banks in terms of price appreciation. The rally, in this case, is however not driven by fundamentals as the bank is yet to release any financial statements for the 2016 and 2017 financial year.
Reliable sources have confirmed that the unreleased results are largely negative. Having beaten the ASI in terms of price appreciation, investors would be better off selling down the stock pending clarity about the bank’s financials.
Japaul Oil and Maritime Plc
The Nigerian Stock Exchange (NSE) commenced new trading rules last week which include the shift of the minimum price floor from N0.50 to N0.01. Investors that have held the stocks for years and gained very little in terms of capital appreciation or dividends are keen to sell off. Penny stocks with poor fundamentals such as Japaul, will suffer significant price depreciation.
For the 9 months ended September 2017, turnover fell from N1.4 billion in 2016 to N1.0 billion in 2016. The company’s losses also increased from a loss before tax of N3.4 billion in 2016 to a loss before tax of N4.4 billion in 2017.
Multiverse Plc is another stock with poor fundamentals that investors could decide to exit from, by taking advantage of the revival of trades due to the new N0.01 minimum price rule. Results for the 9 months ended September 2017 show that revenue fell from N6.3 billion in 2016 to N4.3 billion in 2017. The company’s losses reduced slightly from N381 million in 2016 to N249 million in 2017.