The month of May may have been considered an uncertain period for businesses, given the prevalence of the COVID-19 pandemic, but it turned out a pleasant surprise for many investors. Expectedly, several factors came into play and the result was a bullish trend for most stocks as they strove to regain the losses of previous months.
According to Mr Adebayo Ajayi, Council member of the Nigerian Stock Exchange, some of the factors which may have caused the upward trends in stock market price include the government policy restricting participation in OMO bills, as well as dollar scarcity which caused foreign portfolio holders to channel their funds back into the stock market.
More investors coming into the Stock market means that everyone is on the lookout for great stocks to add to their portfolio. Like most stock experts, Ajayi notes that consumer stocks almost always make good buys, as they are often stable and give better returns.
We conducted an internal survey with Nairametrics analysts and have brought you top 5 consumer stocks you should definitely consider adding to your portfolio.
Nestle Nigeria Plc.
Nestle is arguably a top household brand, with products across cereals, chocolate and confectionaries, dairy, drinks, water, coffea, culinary and frozen foods, and everything consumable.
The company started operations in Nigeria in 1961, and got listed 18 years later in April 1979, trading as NESTLE.
Nestle is usually considered one of the top stocks to look out for, and Ugodre Obi-Chukwu, Nairametrics founder had added it to the watchlist for May noting that“It is an incredible brand and they sell great products”.
The stock’s 8.1% growth did not disappoint as it went from N920.2 per unit on April 30 to N995 on May 29. Market cap also went from N729.4 billion to N788.69 billion, adding N59.29 for the period.
Lead analyst, Emmanuel Abara Benson expresses his confidence in the stocks thus; “That company never fails. Fundamentals have always been good – strong brands and positive financials”.
Nestle is also one among 2 preferred consumer stocks for Samuel Oyekanmi, Research analyst with Nairametrics; and this, he says, is a data-driven choice.
This is certainly a must-have in your stock portfolio, and you definitely want to be on the lookout for your preferred entry point.
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Dangote Sugar Refinery
Sugar is almost an indispensable food requirement, consumed daily, either directly or indirectly. As a top sugar manufacturer in Nigeria, Dangote sugar provides fortified and non-fortified granulated sugar for household consumption, as well as industrial use in pharmaceutical, food and beverage manufacturing.
The company was listed in the NSE in 2007, and has been trading under the name DANGSUGAR since then, making sure to stay top of the chart.
In the last one month, the company stocks went from N12.45 per unit on April 30 to N12.90 per unit at the end of trading session on May 29. This 3.6% positive growth moved the market cap from N149.4 billion to N154.8 billion, a difference of 5.4 billion.
According to Abiola Odutola, Managing Editor of Nairametrics, Dangote Sugar stocks would always be a good bet in anyone’s portfolio. Apart from its good financials and adherence to corporate governance, the stocks are highly liquid making it suitable for even short-term investors.
It is also a fast-moving consumer goods which is showing itself to be resistant to the pressures of the pandemic. So whether you are looking at a short term buy for profits, or a long-term buy, Dangote sugar is a good option to consider.
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Nigerian Breweries Plc.
This drink manufacturer had a fantastic May as value of stocks grew by 43% from N30.00 per unit on April 30 to N43.30 per unit at the close of trading on May 29. Market cap also grew by over 100 billion from N239.9 billion to N346.26 billion on May 29.
Nairametrics Senior Financial Analyst, Lawretta Egba notes that the company stocks is quite stable, and often able to withstand storms in the bourse that most companies won’t.
Trading on the NSE main board as NIGERIAN BREW (NB), the company has a huge market share of the brewing space with a diverse range of brands like Star lager beer, Gulder lager beer, Maltina, Legend Extra Stout, Amstel Malta, Heineken lager beer, Fayrouz etc, and this wide product range largely contributes to its profitability despite market volatility.
“I think Nigerian Breweries Plc is a good add to any portfolio given how volatile things are now. The first reason is that it is a highly capitalized stock so it is relatively stable. It also has a good dividend yield of 4.79%, meaning even if its share price doesn’t grow much, investors can still earn income” Lawretta said.
Flour Mills of Nigeria Plc
Flour Mills of Nigeria Plc has been trading on the NSE main board as FLOURMILL since it was listed in 1978, and its business operations run across food manufacturing, agro-allied feeds, to logistics and support.
Surprisingly, the company stocks did not increase during the month but remained N21.00 per unit share with N86.1 billion market cap on April 30 and May 29.
Nairametrics Market Analyst, Olumide Adesina recommends this stock for medium to long-term investors.
“Technically the stock is undervalued based on its Price book ratio standing at about O.5 and has an attractive dividend yield standing at about 5%” Olumide said.
With good yields, and a price book ratio that is less than 1 (indicating that it is undervalued), you may want to give a second thought to Flour Mills of Nigeria Plc stocks, as you consider options for your portfolio.
Cadbury Nigeria Plc.
Cadbury is one of the largest chocolate and confectionery producers in Nigeria, with dairy products, drinks, and biscuits in its product lines. With its fast-moving consumer goods, the company has remained profitable with its stocks pushing upwards recently.
CADBURY stocks had a positive growth of 15.3% last month; starting at N7.50 per unit and market cap of N14.08 billion on April 30, to end at N8.65 share price and N8.65 and a market cap of N16.24 billion on May 29.
Adherence to corporate governance is a point in favour of Cadbury, and as a fast-moving consumer-producer, its financials always looks good.
Cadbury is also very liquid, and Abiola Odutola also recommends that it should be a top consideration on your list.
Choice of stock for you as an investor is going to come down to what you want out of the market and how long you intend to stay. So, which is it going to be for you?
Great analysis as usual. I and surprised particularly about Cadbury. Never knew the share price is that low. Thanks