The banking stocks seems to have benefited most from the price appreciation this week, this is not unconnected to the availability of liquid stocks in the sector – stocks you can easily buy today and sell off without worries – which is no doubt a major factor fund managers look for before selecting potential stocks to invest.

According to NSE weekly report, a total turnover of 1.567 billion shares worth N20.559 billion in 18,396 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 1.139 billion shares valued at N12.692 billion that exchanged hands last week in 17,109 deals.

Here is the point: The Financial Services industry (measured by volume) led the activity chart with 1.178 billion shares valued at N9.180 billion traded in 9,900 deals; thus contributing 75.14% and 44.65% to the
total equity turnover volume and value respectively. This tells us that most funds are invested in the banking, insurance and financial related stocks.

Why? I think the recent CBN monetary policy, which has shot the windows of opportunities in the fixed income market, is leaving everyone with no option than to buy stocks. Funds that would have been invested in fixed deposits, treasury bills and bonds are being channelled into fundamentally sound, high-yield dividend stocks – and financial stocks are receiving the highest patronage as evident in the NSE weekly report.

While the banking sector index is down by 15.23% on a year to date, quarterly, monthly and weekly data (which are up by 7.28%, 3.67% and 3.59% respectively) are reflecting the expected bullish run on CBN’s policy directives. Since banks are now lowering their minimum savings deposit rate to 1.15% per annum (10% of the new MPR of 11.5%), their cost of funds should also go down to reflect the recent changes, hence push net interest income.

Although this may not rub off on all banks, I think the big tier banks that already have low-cost fund and effective loan risk management policies will benefit most from this trend. One of the banks to watch going forward is GTB.

Now that savings deposit rates and treasury bill are at an all-time low of 1.5% and 2.5% respectively, here are helpful ideas for you to grow your idle cash between now and end of 2020: ignore the market volatility, limit the way you watch your stocks every day, the up-and-down swings can make you exit the market at the wrong time. The temporary market gyration is a normal occurrence, after all, no stock moves in a straight line.

Last week, I posted 2 stocks that are about to appreciate and offer impressive return more as we wrap up Q3. This time, I see a big run on some of the big cap stocks on the NSE market.

With NSE all-share index down by 4.5% on a year to date basis and up by 38% and 1.4% in the last 6 and 1 months respectively, I think it’s makes more to show you the market on a monthly chart.

Below is the NSE all-share index in the last 6 years:

After a strong correction that lasted for 2 years, the NSE all-share seems to be showing a possible bullish run that might take the index to 30,000 basis in the coming months. The MACD cross over that aligns with point (D) on the chart tells us what’s next.

When you buy the stock of a company, how do know if you are actually trading or investing? This is a big question everyone looking to profit from the stock market should answer before placing their next trade.

Investing isn’t the same as trading. This a fact that had helped me build a separate stock market portfolio. When a stock goes down or up in 10, 20 or 30 days on a row, I don’t touch my equity investment portfolio rather I buy more units to increase my annual ROI as long as the fundamentals of the company remain intact but if the same suffix on my trading portfolio, I make sure a sell order is immediately triggered to cut my loss (as long as the stock falls below my acceptable support level.)

Trading, on the other hand, involves buy and selling of stocks frequently for capital appreciation. The goal is to generate returns that beat the NSE all-share index. You profit from stock market trading when you master the art of buying at a lower price and selling at a higher price within a short period – which could be in days, weeks or months.

Last week, I ran a check on some of my stock market trainee’s account, only to discover that they didn’t know why they bought a company’s stock, that’s why they can’t control their emotion on a slight share price fall.

How do you know if a stock is good for investing?

Since investing is a buy and hold strategy, it means the stock I buy should possess the qualities of a great business with solid fundamentals like:

• Consistent year on year growth in sales/revenue, profit and cash flow.
• Competitive advantage from brand monopoly, innovation or high switching cost. A company that meets these criteria should post an average net profit margin of at least 10% in the last 3-5 years.
• Conservative debt and high-interest cover.
• Must be undervalued relative to its market price.
• Consistent in paying a dividend for at least 7 – 10 years.

Investing in the stock market for capital appreciation is not as straightforward as you might think. It requires both a fundamental analysis of the company you are buying but more importantly, sentiment analysis.

The past 1 year has been one of the most volatile periods on record, with the benchmark NSE all share losing 5-6% of its value on a year to date basis. In fact, this year has undeniably taught short term investors how fruitless it is to try to predict stock price movements with fundamentals.

I hope you are reaping from the capital appreciation on Law Union and Rock after I recommended the stock – click here to see my analysis.

A stock that’s cheap may remain cheap for a long time so don’t get caught in the trap of adopting only fundamental analysis if you are seeking capital appreciation from penny stocks but rather use a little of fundamental and more of technical analysis, price action and sentiments.

Yesterday, I decided to scan the stock market for momentum value penny stocks that have high relative strength, posted improved fundamentals and still on track to appreciate further between now and end of the year.

Here are my 2 top picks:

FCMB

FCMB Group Plc provides financial services including micro-lending, asset management, stock-broking, trusteeship and custodial services, foreign exchange, personal banking, corporate and commercial banking, investment banking and transaction banking products delivering cash, trade and liquidity management solutions to entities.

Fundamentals:

FCMB released a stellar result that beats analysts” expectations; a lot of us had expected a lower top and bottom line but in the bank’s Q2 book, here are the highlight of key figures:

• net interest income increased from N38,6b to N45.3b.
• net fees and commission income declined slightly, on higher charges, to N9b (from N10b reported in the previous comparable period).
• profit after tax increased from N7.5b to N9.7b.
• EPS also prints at 49k against 38k.

Price Performance and Technical Analysis

In the last 365 days, the stock has appreciated by 30.97% with 6 and 3 months trend up by 34.44% and 18.7%. This is a clear departure from bearish performance witnessed among the bank’s peer and I think that the recent downward review in savings deposit rate will reduce FCMB’s cost of funds, hence spur the bank’s FY 2020 result.

The stock looks cheap at a PE ratio of 2.03 and a Price to Book Value of 0.18. With its 50-day SMA above its 100-day and 200-SMA and market price clearly above averages, FCMB remains a good buy between N1.9-N2.03

United Capital (UCAP)

United Capital Plc is a financial and investment services company. The Company focuses on investment banking, asset management, trusteeship, securities and insurance. United Capital provides services to corporations, governments, high net worth individuals, institutional and retail investors across Africa.

Insurance stocks are the least followed stocks in the Nigerian stock market. But did you know that if you peruse the list of local penny stocks that doubled on a year to date basis, you will find one fairly priced insurance stock that is up by 106% with more room for capital appreciation.

In November 2019, I made a bullish call on this stock at 60kobo with over 50% upside potential to 80-90kobo, and right now this stock has helped shareholders pocket more than 100% between January and August, the same period a lot of stocksare trading at a year and all time low.

Read here – This Stocks Is Among Bullish Leaders in the Insurance Sector

The stock is Law Union and Rock.

Why is the stock trending up?

The company reported a significant increase in operating profit to N181m in Q2, 2020 (from N43m in previous comparable period) which is like 320% growth while its profit after-tax expanded from N37m to N153m, representing 313% growth.

Logistics companies are no doubt the .backbone of an economy, but stocks in this industry don’t always get the same attention as the banking stocks do, partly because of the monotonous nature of their business – accept parcels from customers or SMEs and send to recipients. With the unexpected disruption of supply chains and the way we buy and sell, this sector is a must-watch for smart investors looking for the next stocks to buy in Nigeria,

My Sure Pick – RedStar Stock – N3.63

Red Star Express Plc engages in the provision of courier services, mail management services, freight services, logistics, warehousing, and general haulage. It operates through the following segments: Courier, Freight, Logistics, and Support Services. The Courier segment involves in express delivery of documents and parcels. The Freight segment includes the clearing and forwarding of goods. The Logistics segment refers to warehousing and chain distribution services. The Support Services segment relates to mailroom management and other delivery services.

I had placed a call on Redstar plc sometimes ago on my Whatsapp group – Nigeria Stock Investors -when the stock was traded for N2.74. This has yielded a return of 32% when you check the market price as of this analysis.

Note: My Whatsapp group is open to premium subscribers only. Reach me on 08084219399.

Financials

In its recent financials, the company reported a 6% growth in turnover to N10.6b and lower operating expenses that helped boost its bottom line figure by 13.9% to N531m (up from N466m recorded in the previous year).

Continue reading “1 Sure Logistics Stock to Buy Before It Appreciates Again”

Let me say this before I share my current picks, I do not reveal all of my stock picks on this blog. It’s not that I am being evasive. The problem is that it’s not easy for me to post here every day as it’s time-consuming, so I’d rather share my latest stock picks on my Whatsapp group, And if you have been buying my stock picks lately, then congratulations!

I don’t pick stocks like a gambler but with a combination of fundamentals (which tells me what to buy), technical (which tells me when to buy) and sentiment (which tells me the stocks investors love), I have helped my subscribers improve their trade results significantly.

Here are some of the stock market picks I shared on my Whatsapp group:

These stocks have helped early buyers pocket an estimated 15-20%+ return via capital appreciation besides Skyavn went from N1.59 to N2.7, that’s 69% return in 2 weeks. Some other picks were MTN at N98, Ecobank at N4,8, Oando at 2.6, Jaiz bank, and so on.

If you want to join our Whatsapp group, kindly subscribe to my one one one coaching service where I will take you from scratch to becoming a good stock picker. Reach me via Whatsapp on 08084219399

Today, let’s look at two healthcare stocks that will enjoy more rapid capital appreciation in the coming weeks as they look oversold on the chart.

Glaxo Smithkline Consumer Plc

GSK has appreciated by 117% and 33.93% in the last 3 and 1 months respectively. This is not unconnected to the fact that healthcare is the hottest sector right now. With the Covid-19 pandemic shaping the way we live and the unavailability of a confirmed vaccine to fight the spread of the virus, we believe the sector will attract more grants and funds from the government.

Technically, the stock is oversold right now which calls for a gradual positioning ahead of a further share price appreciation which is driven by positive sentiments and improved financials.

In its recent financials, the company recorded a slight decline in revenue but profit after tax was largely supported by cost optimizations. EPS on a trailing twelve-month prints at 78k and if you adjust this by a 9% discount, you will arrive at a fair value of N8.6 which is 14.6% above the market price of N7.5.

May and Baker

Just like GSK, May and Baker stock is worth watching right now. I believe that the same sectoral policies that are driving healthcare stocks rub on this stock. In the last 30days, the stock has appreciated by 25.51% as investors factor in improved financials.

While its recent results show a marginal fall in revenue from N8.5b to N8, a significant reduction in net finance cost helped boost its after-tax profit to N716m against N342m recorded in the preceding year. EPS also grew by 67% to 41k (from 24.75k in 2018).

Using a risk-adjusted discount of 9% on its recent EPS of 41k, the stock is fairly priced at N4.5 which represents 47% upside potential from its market price of N3.05.

Make sure you average down on any of these stocks to cut your entry price.

Disclaimer: Kindly do your due diligence. These are my personal opinion on the stocks to buy next week.

The global pandemic has affected a lot of businesses around the world with almost 20-30% expected to close shop if they don’t innovate or activate their business continuity plan. The global stock market isn’t spared either as investors dump their shares for safe-haven assets.

As more measures are been put in place to control the spread of the virus, it is normal for authorities to plan on the strategic re-opening of the economy. With a more relaxed lockdown expected in the coming weeks, I have picked tow penny stocks that will benefit from the resumption of social activities and events while the third, a banking stock with a unique business model is believed to reap from increased issuance of local fixed-income bonds.

In the last 30 days, these 3 stocks that have appreciated by 20%+ return on average, pulled back, and are already showing signs of recovering (supported by unusual volume) from their respective oversold region.

Watch this video to discover the stocks I am buying next week.

Get more stock market updates and ideas by subscribing to my channel:

There are always money-making opportunities available in the stock market. Even amid the current COVID-19 pandemic, there are penny stocks that are poised to emerge stronger, appreciate and deliver handsome rewards to their smart investors that keyed in at lower prices.

I ran a stock screener to scan for more stocks that are benefiting from the current Covid-19 pandemic in the Nigeria stock market, here are the penny stocks I discovered. These two stocks have appreciated by 34.62 and 40.19% in the last 3 months respectively while their month gain is at 18.64% and 29.17%, In the same period, a lot of stocks had shed more than 40-50% of their market capitalization.

Technically, these stocks are trading above their 50-day moving averages, a bullish sign to watch.

If a stock is delivering inflation-beaten return amidst a global pandemic that had affected over 3 million people worldwide, then the company is worth looking into.

Watch this video to discover the stocks I am buying this may.

Get more stock market updates and ideas by subscribing to my channel:

GTBank stock has tested N15-17 three times before rebounding – The first was in 2012, second was in 2016 and the third is 2020.

The banking stock appreciated from N17 to N21, that’s 23.5% profit reward for smart investors that took a position at the support region. As of this analysis, there is a confluence of two indicators – trend line and 50-day SMA acting as near resistance around N21-N22.

In this video, I explained why I quickly took profit on the banking stocks and how I want to take a position again for capital appreciation.

Traders asking for my opinion on GTBank stock should consider going in with half of their funds if they want to hedge against market fall. And If the bank’s stock fails to break out from the N21-N22, we could see a sell-off to its historic support level which is a great opportunity to buy and average down with the remaining half of your funds – this should help reduce the average cost per share.

The second scenario is if the price breaks through the 50-day SMA, then a short term bullish trend is established as new buyers could bid the stock to N27. For me, I am sitting on the fence waiting for either of these scenarios to play out so I can buy the banking stock.

Watch this video and share your comments.

Get more stock market updates and ideas when you subscribe to my channel:

After several delay and unnecessary excuses, I have finally launched a YouTube Channel (Nigerian Stocks to Buy), where you can follow my stock analysis and recommendations. Yes! It’s not easy putting down ideas on this blog but YouTube makes it seamless for me to share stocks picks with visual demonstrations on the chart so that you can learn the technical tools in a simpler way.

Going forward, my stock market analysis will be more of video analysis and less of writing ups:

UACN Stock:

UACN has suffered massive sell-off – from a peak of N70 in the last 6 years to penny stock price of N7.5, after reaching an all-time low of N5.

The stock’s bearish trend isn’t unconnected to the unimpressive financial result of the conglomerate before the company’s management decided to unbundle its real estate segment – UPDC, which spurred a huge stock rally by almost 100%.

As of this analysis, the stock is sitting at the bottom of the market.

In this video, I shared my opinion on UACN stock and how I want to trade the penny stock going forward.

Share your comments and make sure you subscribe.

Get more stock market updates and ideas when you subscribe to my channel:

The best thing that happens to us, as stock market investors looking for moderate capital appreciation, is when a good company gets cheap due to overreaction or fear of losing money.

We know that the whole world is battling a pandemic that has hit some industries very heard but there are some few profitable companies, selling at a huge discount, that are showing potentials of appreciating from their multi-year support levels.

Here’s why you should pick these stocks for capital appreciation:

• GTBank may touch N23

With the price settling below 50-day SMA in the last 3-months and now at N18.85, GTB bank stock has lost 5.28% and 41% of its market value in the last 1 and 3-months respectively.

Recently, the bank’s stock has been appreciating successively for 5 trading days. As of the close of the trade, the stock gained 3% pushing its weekly close to 8.9%.

Continue reading “Buying These 2 Stocks Could Give You 20% Return”

If there is one investing tip I have learned in my years of buying and selling stocks, it’s this: let your winning stocks run and cut the losers. While profit-taking, uncertainties and government policies often cause the stock market to correct, I think it’s a test on our resolve to stick to the stocks we pick, the fact is that good and high-quality stocks will always increase in value over time, hence make investors money if they’re patient.

As for me, of the 6 stocks I hold in my portfolio, there are two that I have absolutely no intention of ever selling this month but will keep buying more because I think they are ripe for appreciation after heavy correction.

Access Bank

One simple way to multiply your money in the stock is to take advantage of the huge price swings; you don’t have to hold a stock for months or years when you can sell for profit, wait for a correction and re-enter at a lower price. This is the summary of my strategy on Access bank’ stock. I keyed into the stock last year (N6.9-N7.2), sold at N10.5 which was 45% ROI, then bought again after a major correction to N9.3, exited at N12 (via a pending order ahead of another correction), 29% return on my investment. That’s like 87% compound return on my initial investment.

You will agree that this strategy tends to reward smarter investors more than risk-averse who had held the stock at N7.2 to today’s market close at N9.8, 26%.

This strategy works for traders that use the daily chart to spot swing trading opportunities amidst a confirmed bullish run.

Here is a screenshot of how Access bank stock had reacted to MACD crossover on the daily chart with another emerging cross to watch. With a successive bullish close in the last 3 days after a 23% correction from N11.95, I think Access bank’s stock is set to appreciate again.

The bank has delivered impressive double-digit growth on both top and bottom-line figures in the last 3 quarters and as investors await its Q4 2019 result, it makes sense to grab a share of this bank at N9.8, today’s close or less for 20-25% return (exit at N11.7-N12).

Flourmill Nigeria Plc

This stock is one of my favourite non-banking stocks. I recommended Flourmill in January but asked my blog readers to wait for a major correction as it was overbought then (N23). In line with my forecast, the stock shed some value to close at N19-N20 but quickly recovered to N22.8.

With the impressive growth recorded in Q3 volume and profit, the stock is a good buy right now.

The chart above highlights the bullish potential of Flourmill using the MACD indicator. Going by historical price performance, the stock has appreciated by 22% on average in the last two (2) crossovers and I think an emerging MACD cross and recent Q3 supports my call to top up this stock at N22.8 or less.

Disclaimer: The information shared here is my personal opinion, you are advised to do your due diligence.

This strategy highlights another way you can still make money from Nigeria stock market.

One of the biggest challenges of a beginner in the stock market is “how to pick the first stock and become profitable“. I receive related questions like this from beginners and amateur traders who are finding it extremely hard to select good stocks with upside potential.

Today, I will be exposing you to a big money-making system – you can adopt in the new year and beyond – that can add more figures to your current portfolio, no complex financial ratio analysis – you only need to wait for earning seasons every three months, do a quick market scan and pick a few stocks that are gaining momentum on big volume.

The idea is what I call Turnaround stocks – these are companies that have fallen out of favour, stumbled badly, whether because of bad management decision or outside events but are staging a bigger comeback and trade at a cheaper price than their projected earnings. Another way to look at turnaround stocks is their previous financial performance; they have been reporting losses in previous quarters but had justed released impressive results in their latest quarter, hence changing investors sentiments and expectations, sometimes you would see analyst upgrade their ratings from sell to buy.

In spotting stocks like this, due diligence is highly required as some companies that were believed to be on track to profitability could fall back to their previous loss position. With this in mind, I always probe the reason a company had just declared a profit and if such could be a one time proceed from asset sales or a result of a strategic move that will continue to impact future earnings.

A solid reason you should embrace this stock investing strategy is that the returns could be big for investors who choose well – Some investors have made 50%, 100%……250% or more from such stock.

Some of the turnaround stocks we’ve had in the past were Cadbury, and UACN – These stocks lost their momentum as a result of weak financial performance but eventually turned around after a major restructuring. From this scenario, we can deduce that most turnaround starts with board restructuring, new management decision, then government policies or economic events.

How can one spot good turnaround stocks?

Like I said earlier, you can either keep track of stocks investors are dumping until they bottom out or have a system that alerts you immediately a stock shows a sign of reversal. While the first option can be tedious as no one knows when a reversal is in sight, the second option employs stock screener to scan for companies that have declared their first quarterly profit after a series of previous losses.

To help us find potential turnaround stocks, we will pick four (4) criteria:

• EPS (FY) – We want to see Earnings Per Share in the Previous Year to be less than 0. This automatically displays all the companies that reported a loss in their 12 months period.
• EPS (TTM) – We also want to see Earnings Per Share for last four (4) quarters in the negative territory (less than 0); this means that the companies are not posting profits for at least the previous four quarters.
• EPS (MRQ) – This is where the turning point starts; EPS (MRQ) implies Earnings Per Share in the most recent quarter. We want to screen for companies that had just reported their first quarterly profit. This may vary; some might have held an impressive run with history of quarterly profit, but for whatever reason (economic events or policies) fell into the negative territory and now seeing their first profit or it could the company’s first profit since inception.

The EPS (MRQ) should be above 0.1 – a quarterly profit tells you that the company is on its way to a full year’s profit.

The final search criterion is to look at the monthly performance.

• Monthly Performance – This is optional but to an extent it lets you measure investors sentiment towards the companies because such could validate your assumptions. The idea is straight forward; if the next quarterly result is expected to be impressive, there is a solid chance the share price should increase after earning announcement and will continue to surge higher in coming months.

When I applied this screener to our local stock market, the result showed two stocks:

• Cornerstone Insurance – The stock declared a loss of 23kobo in 2018 financial year. Right now, its loss per share in the previous four quarters is 4k while its recent quarterly result indicates a profit of 16kobo. The stock is up by 129.63% and 16.98% in the last 3 and 1 month respectively.
• Royal Exchange Insurance – This insurance provider just declared an impressive quarterly result of 11kobo per share which is far high than its previous full year’s loss per share of 3kobo and trailing 12 months loss of 7kobo. With a share price of 28.57% and 35% in 1 and 3-months period, Royal Exchange plc is no doubt another example of turnaround stocks to watch.

In trading turnaround stocks, it is best to buy earlier than the big volume traders or else, you might end up buying at the top of the roof. Technical analysis of price is highly required to avoid buying high and selling low.