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%.
I think a rising Relative Strength Index from 20 to 44.43, coupled with bullish MACD crossover and Relative Volume of 0.62 on the daily chart makes the stock a buy for speculators looking for capital appreciation.
Recommendation: Buy at the market price of N18.85 and sell for a 22% profit at N23 (20-day SMA). If the price crosses this average on increased volume, I think N27 is a strong resistance level to consider.
Nestle is now at support levels.
The last time Nestle was insanely cheap like this was in 2017 before appreciating by 100%. This doesn’t imply that the consumer goods stock is poised to deliver a similar return, but I think N830 is a support level to consider right now.
After losing 9.3% and 43.5% in the last 1 and 3-months respectively, Nestle seems to be gaining momentum again as indicated by a Relative Volume of 0.97; investors are currently trading huge volumes relative to its average in the last 30 days. A sharp rise in the Relative Strength Index above 30 and MACD crossover are also supporting indicators that point to more capital appreciation.
In yesterday’s trade, Nestle moved up by 8.52% to close at N830.2.
Recommendation: Buy at a market price of N830 and sell at the N1,033, the nearest 20-day SMA (that’s 24% upside potential) and if price defies that level, it means the stock may reach N1200.
Disclaimer: The ideas shared here reflect my trading plan next week and doesn’t in any way imply a buy or sell advice.