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.
Thank you for this analysis on capital appreciation. But can we till buy stocks in this lock down period
Why not? But you need to cut down your profit expectation and play safe. Price and Volume analysis are critical to your success.
Thank you very much. Lets see what happens by tomorrow. please can you explain a safe net for volume
There is no specific units of shares traded to justify volume in the stock market. I use Relative Volume, a tool that lets you compare the current volume of shares traded against the average in the last 30, or 90 days. This will help you spot stocks that are attracting inventors’ interest.
Good morning, is it advisable to buy some of these stocks at the current price, Lafarge Wapco, Cadbury, GTBank and Zenith Bank. I considered these stocks as a turnaround stock with more potential for growth in the short run.
These stocks have been trending up lately, so I think they have more upside potentials.
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