Nigerian stocks have recorded an exceptional run of gains this year, with yield already as high as 40 per cent even when the first quarter is not yet over.
The performance owes its debt to a boom in local participation in the market, which has helped to tone down the adverse impact that a slide in foreign portfolio investment, once the lifeblood of the market, would have had on equities.
In the general run of things, interest rate hikes cause share prices to fall as investment funds tend to gravitate towards fixed income assets, whose yields often rise in such cases.
But Nigerian stocks are resisting that notion as returns continue to climb, despite an aggressive increase in the reference interest rate by as much as 400 basis points by monetary authorities last month, meaning Nigerian stocks are increasingly resilient.
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The central bank is set for another rate review announcement on Tuesday. This week, investors will be on the watch for the audited earnings report of big lenders Access Holdings, Zenith Bank, United Bank for Africa and GTCO, with their performance likely decide the next turn the overall market will take.
PREMIUM TIMES has assembled some stocks with fundamentals and other potential, adopting key analytical approaches to save you the hassle of randomly picking equities for investment.
The selection, a product of analytical market watch, offers a guide to entering the market and taking strategic positions in hopes that equities will increase in value 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.
UPDC Real Estate Investment Trust (UPDC REIT)
UPDC REIT tops this week’s pick for currently trading significantly below its intrinsic value, brightening its chances of strong price appreciation in the future.
ALSO READ: STOCKWATCH: Ecobank, Regal Insurance, C & I Leasing top stocks pick this week
The price-to-book (PB) ratio of the company is presently 0.4x, while its price-to-earnings (PE) is 3.4x.
FCMB Group
FCMB Group makes this week’s list for currently trading below its real value. The financial services group’s PB ratio is 0.4x, while the PE ratio is 1.8x.
Access Holdings
Access Holdings features on this week’s list for currently trading below its intrinsic value. The lender’s present PB ratio is 0.4x, while the PE ratio is 3.2x.
Mutual Benefits Assurance
Mutual Benefits appears in the pick for currently trading well below its actual value.
Its PB ratio is 0.4x at the moment, while the PE ratio is 2.4x.
Sovereign Trust Insurance
Sovereign Trust Insurance appears on the list for trading significantly below its real value.
The underwriter’s PB ratio is 0.4x, while its PE ratio is 6.6x.
C & I Leasing
C & I Leasing makes the cut for currently trading below its real value. The company’s PB ratio is currently 0.4x, while the PE ratio is 7.9x.
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