Transcorp, UBA, Africa Prudential top stock pick this week

Profit-taking seems to be settling in as Nigerian stocks receded at a sharper pace last week.

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The market may even see further pullbacks, with a number of equities already trading at their 52-week highs and stocks generally lacking strong drivers to advance higher in the near term, according to analysts.

Earnings announcements by some big lenders that are yet to release their half-year results could play a key role in driving trade, considering how much of daily market transaction volume is contributed by the banking sector alone.

“The market is likely to retreat as profit-taking sets in,” researchers at the brokerage United Capital said in their investment view for this week.

“However, investors’ interest should remain focused on fundamentally strong financial services stocks, supported by resilient earnings and attractive valuations,” they also stated.

PREMIUM TIMES has assembled some stocks with sound fundamentals, adopting rigorous approaches to save you the risk of picking equities at random for investment.

The pick, a product of an analytical market watch, offers a guide to entering the market and taking strategic positions in hopes that selected stocks will record reasonable price appreciation with the passage of time.

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This is not a buy, sell or hold recommendation but a stock investment guide. You may need to involve your financial advisor before taking investment decisions.

Transcorp

Transcorp tops this week’s list for currently trading at a low year-to-date return, offering it room for further price appreciation. The net profit ratio (NPR) of the conglomerate is 23.3 per cent, while the price-to-earnings (PE) ratio is 7.1x. Its relative strength index (RSI) is 45.2.

United Bank for Africa (UBA)

UBA makes the selection for trading at a relatively low year-to-date return and below its intrinsic value, brightening its chances of further price appreciation as well as its appeal to value investors. The pan-African lender’s NPR is 24.9 per cent, while its PE ratio is 2.1x. The RSI is 64.9.

Africa Prudential

Africa Prudential appears on the pick for trading at a discount to its lowest price since the start of the year, its current year-to-date return now being -25.8 per cent. The NPR of the financial services institution is 39.1 per cent, while the PE ratio is 21.3x. Its RSI is 43.2.

ALSO READ: Zenith Bank, Living Trust Mortgage Bank, Fidelity Bank top stock picks this week

Sterling Financial Holdings

Sterling Financial Holdings makes the cut for trading at a modest year-to-date yield, highlighting the ability of its share price to climb higher in the future. The banking holding company’s NPR is 19.6 per cent, while the PE ratio is 4.1x. Its RSI is 56.5.

Chemical and Allied Products (CAP)

CAP makes the cut for its currently sound fundamentals, which support further share price gains in the near term or beyond. The NPR of the industrial goods’ company is 12.6 per cent, while the PE ratio is 12.6x. Its RSI is 60.8.