I ran a scan of Nigerian stocks using the strategy I shared in my new book – Explosive Stock Strategy – but to my surprise, I discovered a stock I wouldn’t have thought of as a good pick.
This particular company will definitely not be on my list of random picks if I want to pour idle cash into the equities market. Well, that’s the advantage of having a proper stock trading strategy; it takes all guesswork off your head and put you on a path to achieving repeated success, at least 70 -80% even in a bearish market.
Lest I forget, the explosive stock strategy is one that focuses on medium to long-term stocks that have outperformed the NSE All-Share Index with a high probability that the momentum isn’t slowing down anytime soon. And such share price appreciation isn’t dependent on annual financial results or else, you’d be missing out, so I watch out for key data that are driving positive sentiments.
Let’s look at the chart of this penny stock:
From technical standards, the stock seems to be trading within a range in the last 8 years which means we have a near-term resistance that’s 40% above the current market price.
The recent increase in the price of essential items and renewed demand for disposable drinks since the lockdown was lifted seems to be a major driver of the company’s revenue.
In its Q1 earnings result, revenue increased by 65% to N150 million while loss before and after-tax narrowed significantly by 92%, from N87 million to N6.4 million. The Q2 result also reflects a continued trend with revenue growth prints at a whopping 239%.
What’s even more interesting is that they achieved a 98% reduction of loss incurred in the previous comparable quarter. In Q2 2020 alone, they reported a loss of N90 million and that’s been fully recovered with just N1 million reported in the recent quarters.
The screenshot is a half-year breakdown of revenue by segment.
The company recorded 278% growth in the first segment which is even 60% of the revenue generated in the previous financial year while it achieved 96% expansion in the second product segment which is also 70% of the 2020’s revenue.
This is a typical example of explosive stocks, that can spike by 50%, 100% or even 250% in 6 months to a year, which I discussed in my book.
In the last 3 and 6 months, this penny stock has outperformed the NSE index by a double-digit run of 32% and 20%.
Which of the stocks is this?
I have shared the strategy to find stocks like this in my book and if you are a member of my private community, do check the group for updates.