As the build-up to the 2023 general election and interest rate hike continue to depress investors’ appetite in the Nigerian equity market, some stocks and sectors could be profitable for long-term investors.
Though it is expedient to remain very cautious in the near term, some penny stocks offer attractive entry opportunities for discerning investors. That’s why investors should renew positive sentiment in these stocks to increase capital gains and reap big dividends at the year-end.
According to some analysts who spoke to Nairametrics, equity investors should consider buying or holding penny stocks of public companies that have been consistent with dividend payments.
They listed stocks like Fidelity Bank which last traded at N3.75 per share, Wema Bank (N3.30 per share), Sterling Bank (N.52 per share), Jaiz Bank (89 kobo per share), Transcorp (N1.05 per share) Learn Africa Plc (N1.86 per share) among others. These stocks have the potential for share appreciation in near future as stocks. They are also dividend-paying stocks. Therefore, they have good fundamentals and should interest investors.
The analysts further noted that the fact that the share prices of the companies are dropping makes them even more attractive and present golden buying opportunities. Hence, this is the time for investors to accumulate the stocks to reap bigger dividends in near future.
What investment analysts are saying
Mr. Tajudeen Olayinka, the Chief Executive Office of Wyoming Capital & Partners told Nairametrics that in a period of extended bearish trend due to prolonged repricing of securities across markets and instruments, equity investors’ best bets are stocks that have been consistent with dividend payments. He said:
- “If they must buy penny stocks, the same rule should apply. Stocks with strong fundamentals are always able to weather the storms. And when the bulls return, fundamentally sound stocks tend to lead the recovery. s also important to consider the long-term horizon when investing in stocks, especially at this difficult time.
- “For good prospects and long-term appreciation, investors are advised to buy or hold stocks like fidelity Bank, Wema Bank, Sterling Bank Jaiz Bank, and Cutix. These stocks are more stable than other volatile stocks. I prefer these stocks because they are consistent in dividend payments. But anybody that is buying stocks generally now should look at benefits in the long run.”
The Managing Director of Crane Securities Limited, Mr. Mike, also told Nairametrics that the market was ripe for investment going by the current low prices of stocks.
Eze noted that market activities would eventually stabilise after the general elections, adding that this was the perfect opportunity for investors to stake their funds in the market. He said:
- “This is the right time for investors to take part in the equities market, with the prices of shares at their lowest levels. Brokers are confident that after the elections, the market would begin to stabilise and investors would begin to record significant appreciation on their investments.
- “Stocks such as Cutix, Fidelity Bank, Jaiz Bank, Sterling Bank, Wema Bank and Tanscorp are good to buy at this period because they will record significant appreciation in near future. Because with the little funds you will buy a large number of penny stocks or low-price stocks, and that enhances your position as a shareholder. If dividends are declared by such companies, the shareholder will earn a sumptuous dividend.
- “The likelihood of being adopted as a director of the company is also guaranteed. But with highly capitalised stocks, investors may use an enormous amount of funds to buy a little quantity and when dividends are declared, the take home will not be appreciable and then you cannot think of any appointment as a result of your shareholding.”
Mr. David Adonri, the Executive Vice Chairman of Hicap Securities Limited said:
- “The market has been in a perpetual decline due to build-up to 2023 elections and the recent interest rate hike. Generally, it is a good time to buy stocks that have good fundamentals and potential. Some penny stocks have good potential. Companies that are profitable with good prospects include Fidelity Bank Plc, Jaiz Bank Plc, Wema Banks Plc, Transcorp Plc, Learn Africa Plc and Academy Press Plc. These companies are good stocks to buy. They are profitable, their earnings are good and their prices are not bad.
- “To invest profitably in this changing environment, you need investment education, trading plans and trading tools/software. These will help manage risk associated with volatility and unstable markets.”