Fidelity, NEM Insurance, CAP top stock pick this week

Nigerian stocks reported a 1.9 per cent gain last week, supported by strong demand for insurance and consumer goods stocks. Investor sentiment continued to improve with all the sector indexes recording gains as investors realigned their portfolios to take advantage of stocks with price growth prospects.

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Strategic positioning for the New Year is likely to shape activities in the market in the next couple of weeks as investors seek right entry points for reinvestment in fundamentally sound stocks.

“Overall, the market tone is expected to remain mildly bullish, supported by targeted buying in quality names,” Meristem Securities stated in a note to investors last week.

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, with the expectation that selected stocks will record reasonable price appreciation with the passage of time.

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.

Fidelity Bank

Fidelity tops this week’s list for its strong fundamentals and for trading below its intrinsic value.

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The net profit ratio (NPR) of the lender is 19.1, while the price-to-earnings (PE) ratio is 3.6x. Its relative strength index (RSI) is 49.6.

NEM Insurance

NEM Insurance appears on the pick for trading below its intrinsic value. The NPR of the insurer is 21.2, while the PE ratio is 4. The RSI is 14.9.

CAP Plc

CAP makes the selection for trading below its intrinsic value. The company’s NPR is 11.6 per cent, while the PE ratio is 11.6x. Its RSI is 35.2.

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Vitafoam

Vitafoam makes the list for its strong fundamentals. The NPR of the company is 8.7, while the PE ratio is 8.4x. Its RSI is 56.

Stanbic IBTC

Stanbic IBTC makes the cut for its fairly strong fundamentals and for trading below underlying value. The banking group’s NPR is 34.5 per cent, while the PE ratio is 4.8. The RSI is 44.1.