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Business News of Monday, 16 November 2020

Source: Naira Metrics

Top 5 Nigerian stocks this year: This relatively unknown stock has gained 400% this year

Nigerian Stocks are currently fired up on all cylinders in 2020. The Nigerian stock market Year-to-Date (YTD) returns presently stands at +27.72%. The Nigerian Stock Exchange capitalization presently stands at N18.3 Trillion.

Thursday, November 12, was a historic trading week, as the NSE All-Share Index (ASI) posted its largest daily gain in more than five years. Such outstanding returns prevailing Nigerian Stocks triggered Nairametrics Stock Select Newsletter (SSN), in revealing the top 5 stocks investors have made the most gain from, taking into consideration the year to date performance only.

Sunu Assurance Nigeria PlcThis relatively unpopular stock has gained 400% this year, as it continues to attract significant buying pressure in the Nigerian bourse. The company formerly known as Equity Assurance Plc is majorly into underwriting all classes of general business.

It has been able to attract investors’ confidence on many fronts. Some of the key fronts include reports by its Chairman, Mr. Kyari Bukar, assuring investors that it will satisfy the newly required minimum paid-up capital of N5 billion before the close of 2020 amid the competitive environment in Nigeria’s insurance sector; not to forget that the company’s underwriting profit gained by 30% from N914 million in the 2018 financial year to N1.2 billion in 2019.

The Chairman of the fast-growing Nigerian assurance company also hinted at how the company has been able to stay remarkably efficient by improving operational efficiency and optimizing its current assets.

Livestock Feeds PlcIt is unsurprising to see a medium capitalized company with 190% YTD gains as Livestock Feeds have seen in its business growth rise over the years. This is attributable to the border closure by the Federal government, which increased animal production. Thus, demand for its primary product has helped its boom amid an era of COVID-19, as it presently controls half of the Nigerian market share for animal feed.

In its most recent financial statement, Livestock Feeds Plc recorded an 828.32% jump in profit after taxation to N130.466 million in Q3 2020 from N14.054 million in 2019.

Profit after taxation in 9 months surged to N224.804 million from N9.578 million in 2019.

BUA Cement PlcThe cement “tiger” has seen its stock price gain 187% YTD. The highly capitalized stock, BUA Cement Plc, ranks as Nigeria’s second-largest cement company and the largest producer in South-South, North-West, and South-East regions of Nigeria.

It has recorded impressive gains this year amid a shortfall in construction projects across Africa’s largest economy, showing resilience by expanding its operations across key regions. The cement juggernaut in its latest earnings recorded revenues of N156.6billion in its 2020 third quarter (Q3) financial results for the 9-months ended September 2020 – an increase of 21% from N129.4billion in the corresponding period of 2019. BUA Cement’s Profit After Tax (PAT) also grew by 24% to N53.57billion.

United Capital PlcThe leading investment bank has seen its stock price gain 106% YTD. United Capital against headwinds has surprised investors amid the viral onslaught negatively disrupting the financial market, yet it has been able to leverage technology to empower businesses, governments, individuals, and with excellent financial services in investment banking, asset management, wealth management, and consumer finance.

As seen in its latest earnings result, United Capital Plc posted revenue of N7.07 billion and profit after tax (PAT) of N3.46 billion in 9 months. Looking deeper into these impressive results, it showed that total revenue gained 33% from N5.32 billion in 2019 to N7.07 billion in 2020.

Fidson Healthcare PlcThe medium-sized capitalized pharmaceutical company has seen its share price gain 93% YTD Plc. The surge is largely attributed to a major increase in its ethical drugs and OTC revenue-generating units.

It’s important to note that pharmaceuticals have recently seen their revenues ticking up, as humans increase their demand for drugs amid the pandemic prevailing around the world. In its latest earning, it printed revenues of N13.65 billion in 2020 9M compared to N10.48 billion the same period in 2019 and had Pre-tax profits surge to N1.44 billion, showing a 257.74% gain.

Bottom-line

In a phone interview with Nairametrics, Mr. Abdul-Rasheed Oshoma Momoh, Head, Capital Market in TRW Stockbrokers Ltd, spoke on the bullish run prevailing at the Nigerian stock market, taking into consideration foreign portfolio investors’  little influence seen lately and the high demand seen lately for Nigerian medium and high capitalized stocks among Nigerian institutional investors, as the Nigerian money and debt market become less attractive.

On the top 5 performing Stocks, Mr. Momoh disclosed that his favorite is United Capital Plc, on the bias that it has a decent dividend yield coupled with a relatively strong performance in its earnings over some years now.

He concluded that though a market correction seems very likely when considering the Elliot wave pattern’s recent reading, it’s fair to say Nigerian Stock bulls might have a long ride, as record cash flows into Nigerian Stocks grow astronomically.

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