Nigeria’s equity markets might look unattractive now after the broad index has fallen nearly 40% in 2 years. However buying some beaten down stocks today may see you double or triple your money in 3 to 5 years.
Stocks like UBA, Access Bank and First Bank (if you have a high risk appetite) are equities investors can begin to nibble on.
First Bank is particularly interesting.
First Bank of Nigeria is a perpetual under-achiever like we have mentioned times without number on this site. The above chart (5 year) for FBNH is one of the ugliest charts i have seen of any stock in the Nigerian markets.
FBNH has a market cap of only N108 billion today, but controls total assets north of N4 trillion. If it triples in value it will still only be a N300 billion company (roughly $1 billion) If you invest N1 million (staggered over time) at near its today price of N3 per share, you could probably see this one rise to N9 per share in 3 – 5 years.
Caveat (Bear case)..FBN is a risky bet…Its kind of like buying Citigroup or JPMorgan in 2009. While those that held on made out well it’s not for the faint hearted.
First Bank has huge earnings generating capacity (as Nigeria’s largest bank by assets) but struggles with poor internal controls and high costs.
A new CEO was recently appointed to clean up the place. It is still unknown if he can change the culture within the bank.
