The Nigerian Exchange (NGX) in 2025 is showing stronger resilience compared to last year.
By the end of September, the All-Share Index (ASI) closed at 142,377.56 points, reflecting a YtD gain of 38.33%, ahead of the 31.88% gain recorded in the same period of 2024.
Yet, even in a bullish market, dips always emerge.
As of September, 17 stocks have posted YtD losses, compared to 31 stocks in 2024.
Why a Dip?
Stock market dips are not unusual; they are part of the natural cycle of rallies and corrections. A stock that delivers eye-popping returns one year can easily stumble the next.
For example, Sunu Assurance was the toast of 2024, gaining almost +877% as investors piled in. But in 2025, it has slipped by -44% YtD.
Similarly, Juli Plc led the NGX in 2024 with a staggering +1,646% rally, but by September 2025, it had shed -3.88% YtD.
This flip in fortunes is not necessarily a sign of weakness; rather, it reflects profit-taking, shifts in sectoral sentiment, and short-term market overreactions.
Oil & Gas stocks like Conoil (-45.48%), Oando (-30.30%), and TotalEnergies (-8.31%) are also in the red after strong rallies in 2024.
The Utilities and Power sector tells a similar story: Transcorp Power is down -12.75%, and Geregu has slipped -0.74%, despite being among the hottest stocks last year.
This pattern highlights the essence of “buying the dip.”
It is the strategy of taking advantage of temporary weakness in quality stocks with the expectation of a future recovery.
Investors who correctly identify which companies are fundamentally strong, undervalued, despite the decline, can make gains buying the dip. But there are signals and things to watch out for.
52-week highs and lows
The 52-week high and low show the price range of a stock over the past year and help investors judge whether the current price represents a bargain.
- Stocks trading close to their 52-week high are often considered pricey or fully valued.
- Stocks trading far below their 52-week high may be undervalued, but are only worth buying if their fundamentals and liquidity remain solid.
In this context, a few names stand out:
- Sunu Assurance is trading at just 39% of its 52-week high.
- Africa Prudential trades at 45% of its 52-week high.
- United Capital trades at 57% of its 52-week high.
- Conoil trades at 61% of its 52-week high.
These stocks are trading well below their peaks, suggesting possible bargain entries if their fundamentals back up the discount.
On the flip side, Seplat Energy is still trading at about 95% of its 52-week high, meaning the stock remains near its peak. This suggests less of a “dip” opportunity compared to the others.
Profit strength
Beyond price movements, earnings remain the clearest signal of a company’s health.
A dip is worth buying only if the business is still delivering profit growth or has the potential to rebound strongly.
For example:
- United Capital, even with a -7.3% YtD loss, remains one of the most profitable non-bank financial institutions, with a consistent profit at a cagr of over 60% in the past five years. Its earnings base can provide confidence that the current dip could be an opportunity.
On the other hand, Golden Breweries and Morison Industries, with weaker earnings profiles, show how not every dip translates to value sometimes losses reflect underlying business struggles.
The lesson: Earnings are the safety net for dip buyers. Without them, cheap can quickly become a trap.
Consider dividend
For many investors in the NGX, dividends are a key attraction. A stock that consistently rewards shareholders can make a dip more attractive because investors still earn while waiting for prices to recover.
Take Seplat Energy, for example: despite a modest -5.6% YtD dip, the company remains one of the most reliable dividend payers on the Exchange, paying quarterly dividends.
This consistent payout is an attraction that can give investors’ confidence to hold through short-term price swings, knowing they are still compensated.
By contrast, companies like Golden Breweries or Morison, which lack strong dividend histories, offer little income buffer during periods of decline—making their dips riskier bets.
The bottom line: A reliable dividend stream can turn a temporary loss into a patient investor’s gain.
Check if it is cheap
At the end of the day, buying the dip only makes sense if the stock is trading at a fair or attractive valuation.
Price alone doesn’t tell the full story. What matters is whether the stock’s earnings, book value, and growth potential justify its current level.
Take Oando, for example: despite a -30.3% YtD loss, it currently boasts the lowest price-to-earnings (P/E) ratio among oil and gas stocks on the NGX. This suggests the market may already be pricing in most of its risks, leaving room for upside if earnings remain steady.
In contrast, Conoil has fallen even further (-45.5% YtD) and trades at just 61% of its 52-week high, but its P/E ratio of 76 shows it is still expensive relative to earnings. This signals caution because a low price doesn’t always mean good value if profits don’t keep pace.
The golden rule: A dip is only a real opportunity if valuation and fundamentals align. Otherwise, it’s just a falling knife.
Overall, when buying the dip, focus on stocks that are trading far below their 52-week highs, backed by solid earnings, reliable dividends, and attractive valuations. Using this checklist helps separate true bargains from falling knives.
