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.
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.