Mutual Benefits, NPF Microfinance, Sterling Bank stock pick this week

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Nigerian stocks are gaining back lost ground after an announcement of plans to aggressively increase capital gain tax on shares caused the market to tank by 5 per cent on a single day in November.

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The benchmark index added 2.5 per cent last week, thanks to a surge in buyers’ interest in industrial goods and bank stocks.

Mild profit-taking pressures are likely to be witnessed as the year end draws near.

But that is not a cause for worry, with the current positive sentiment in the market strong enough to temper such disruptions and a 42.9 per cent year-to-date yield on stocks already in the bag.

“Many stocks now offer attractive entry points, and we might see increased buying activity as investors take advantage of the recent price corrections,” Meristem Securities said in its outlook last week.

“Also, the MPC’s decision to hold rate, alongside the adjustment of the asymmetric corridor, is expected to sustain buying interest in the financial sector.”

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

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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.

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.

Mutual Benefits Assurance

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

The net profit ratio (NPR) of the insurer is 25.8 per cent, while the price-to-earnings (PE) ratio is 3.2x. Its relative strength index (RSI) is 40.6.

NPF Microfinance Bank

NPF Microfinance appears on the pick for trading below its intrinsic value and for its low RSI, which offers an attractive entry point for potential investors.
The PE ratio of the lender is 5.7x, while its RSI is 36.3.

Sterling Bank

Sterling Bank makes the cut for trading below its underlying value.

The lender’s NPR is 18.1 per cent, while the PE ratio is 4.9x. Its RSI is 43.9.

Consolidated Hallmark Holdings

Consolidated Hallmark Holdings makes the list for trading below its intrinsic value.
The PE ratio of the underwriter is 2.7x. The RSI is 42.1.

Africa Prudential

Africa Prudential makes the cut for its fairly robust fundamentals.
The company’s NPR is 36.5 per cent, while the PE ratio is 17.3. The RSI is 41.9.