This is Why Zenith Bank Made More Profit in 2018

Zenith bank had just released its full-year result for 2018 with profit after tax coming out better than the previous year’s figure (2017).

The bank also increased its final earnings (PAT) by 11% to N193b, from N173b while gross earnings fell by 15% to N630b, from N745b.

While this isn’t a bad result, I believe a deeper look at specific figures will help us know where the bank is and possibly, future direction.

Let us look at some of the key figures and performance metrics:

  • Interest and similar income fell from N474b to N440b,  7.1% drop. No thanks to a drop in interest on loan and advances to customers

Continue reading “This is Why Zenith Bank Made More Profit in 2018”

Why You Should Keep an Eye on NSE All Share Index Right Now

Investors seem to have ignored the political risk, shun the upcoming election and started hunting for cheap stocks ahead of the financial year-end result.

Last week, the NSE index closed on a positive note with the year to date return now on the green side. Even as I share this post, the market ended the trading session at 32,462 basis point, up by 2.14%, Year to date, the index is up by 3.28%

While this is in line with the stock market cycle, where gains are usually recorded in the first half of the year, it makes more sense to analyse the general market sentiments; a technical analysis that helps us ascertain the short term direction of the market.

Let us look at the NSE index direction on a weekly chart:

The market turned bearish in February 2018 as investors flee to safety on rising interest rate in the US, geopolitical tension between the US and Iran, brewing political uncertainties (battle between the two key parties )and trade wars between economic powers. While the first, second and fourth risk isn’t talked about like before, the third risk which seems to be the fundamental driver of the market direction.

Continue reading “Why You Should Keep an Eye on NSE All Share Index Right Now”

4 Reasons You Should Buy Learn Africa Stock at N1.40

When I shared a list of stocks you should watch closely before the general election, LearnAfrica was one of the stocks I asked my blog subscribers and Whatsapp group members to keep an eagle eye on.

The stock went up by 40% in 2018.

The stock, from the time we shared out first analysis, has appreciated by 12% to close at N1.4, from N1.24.

Here are 3 reasons we think the publishing company could go higher than its current market price.

The stock’s 50-day SMA had just crossed its 200-day to the upside.

When a stock is trending up as a result of increased buying interest, the moving average tends to follow the same direction and one of such is the 50-day SMA, an important average that reflects investors’ sentiment in medium to short term.

The 50-day MA also coincides with the 3-month period; this is the period every company is expected to release its quarterly results. A cross above the 200-day SMA indicates that the penny stock is attracting attention.

Continue reading “4 Reasons You Should Buy Learn Africa Stock at N1.40”

Why Fidelity Bank Is Still Cheap at N2.38

If you had bought Sterlings bank’s stock when I shared my analysis of the banking stock and how it was grossly undervalued at N1.61, your equity investment should be up by 47%. The stock, as of this update, now sells for N2.36. Such return in 3 months is hard to come by in Nigeria, not even CBN Treasury Bill, FGN Bond nor your local bank’s fixed deposit can give you double-digit return.

Another stock I had mentioned on this platform is Newrest ASL. I bought this stock at N4.95 and sold at 7 after the company notified the exchange of its voluntary exit, which translates to 41% return.

While we can’t assign 100% accuracy to our stock picks, we believe, from results, that you have a higher chance to make more money consistently, beat the market and build a passive income investing business if you master and stick to the stock trading strategy shared here.

Continue reading “Why Fidelity Bank Is Still Cheap at N2.38”

How Do I Invest in Treasury Bills in Nigeria?

How Do I Invest in Treasury Bills in Nigeria – Treasury Bill Rates Today in Zenith, GTBank, FirstBank, Access, Stanbic IBTC, Ecobank, Sterlings, Fidelity, Union Bank & FCMB 2019

This guide is for investors that are looking for alternative investment opportunities in the fixed income market. In my previous investing tips on where you should invest your money, I mentioned TB among other places you can grow your money.

Let’s Discuss Treasury Bills

Treasury Bills are government debt instruments issued by Central Bank of Nigeria on behalf of the former to finance expenditure. The instrument is sold through a bi-weekly auction conducted by the Central bank in Primary Market Auction. Buyers are requested to quote bids following which the average minimum bid is selected.

Steps to Buy Treasury Bills in Primary Market:

To buy Treasury Bills you will have to approach your bank requesting for a form. You fill the form with your personal information also indicating the amount you want to buy as well as your bid rate. However, with the advent of a bank’s treasury bills mobile application, buyers are only required to fill a signup form once.

Nowadays, the easiest way is through Sterlings Bank’s Treasury bill mobile app. The app is accessible to all irrespective of their bank. Gone are the days when the idea of investing in treasury bills meant owning millions in order to invest.

Continue reading “How Do I Invest in Treasury Bills in Nigeria?”

3 Stocks to Watch Closely in this Pre-Election Season

We are a few weeks away from the general election, the stock market index is at bottom of the curve, a bearish trend that started last year (2018). But should you follow the crowd and wait for the stock market to pick before investing? I bet you, you may be paying more than what you can get right if you allow fear to drive your trade decisions.

According to Warren Buffet, the best strategy to make money in the stock market is to be greedy when others are fearful and the be fearful when others are greedy. While the latter is for the bullish market, the former is for a bearish market.

Although we might witness another market fall as election risks drive more fund flow from the equity market to safer fixed income instruments but 28,000 – 30,000 basis point seems like a strong support region to watch closely.

How can one be greedy in this market when the daily index fall is alarming amidst Election Fever?

For me, I use moving average crosses to pick good stocks that are outperforming the market index, this strategy account for 80-90% of my success in the Nigeria stock market. As simple as the tool is, it has helped me weed out sluggish stocks and scan for best performers even in a bearish market.

Continue reading “3 Stocks to Watch Closely in this Pre-Election Season”

The Short term Stock Trading Strategy that Works

Trade Nigerian Stocks Using These Short-term Strategies – Learn the Best Short Term Trading Strategies that Works and Makes 20-30% Return in a Bearish or Bullish Market

The key secret to making money in the stock market isn’t all about jumping into a fast-rising stock because you don’t know when the trend is about to reverse but understanding and having a perfect trading strategy that spots the beginning of a bullish trend ahead of others.

In this guide, I will be sharing a short-term stock market trading strategy that can deliver an impressive gain of 25-30% return in 1-3 months. With this guide, you will weed out bad stocks, focus on momentum stocks that are attracting huge buying interest even in a bearish market.

My result:

I bought Sterlings bank and averaged down to N1.6 on November 4th, 2018 and after 1 month, I sold  50% of my units holding at N2 per share (25% profit), I left the other units because the banking stock could surpass the fair value estimate since it had delivered double-digit growth in the last 9 months.  As of this write-up, Sterlings is selling for N1.81 per share.

See – Analysis of Sterlings Bank stock during Golden Cross

To save time on this long story, the strategy I am talking about is Golden Crosses.

What is Golden Crosses? This is a moving average crossover that describes a rare cross between the 50-day SMA and the 200-day SMA. While the 50-day measures the average price of a stock in the last 3 months and widely used by short-term traders, the 200-day, used by long-term investors, measures the average price of stock in the last 1 year.

If you invest for a long-term, you shouldn’t be worried about short-term fluctuations, rather look for longterm sentiments and momentum stocks.

An effective Golden cross isn’t all about chart patterns but understanding the fundamentals behind price.

If a company is built on solid financials; impressive double-digit quarterly results and has a steady rising trend, and suddenly the 50-day moving average crosses the 200-day to the upside, it can bring the attention of a lot of existing and new investors.

You must also note that for a Golden Cross to happen, the stock’s price must have been moving up for a reasonable amount of time before the cross happened, say 3-6months.

After all, the shorter of the two moving averages are 50 periods. (EG 50 days), so for the price to pull the 50MA up to cross above a 200-day average, then there’s already been some significant strength in the price.

Please note that it is not all crosses that are golden, you need to understand the fundamentals of the stock, check recent results, opportunities and fair value estimate.

Here are my criteria for picking stocks that made golden cross:

  • The 50-day SMA should show a recent cross above the 200-day SMA; for instance, the 50-day price of Sterlings bank was N1.52, slightly above the 200-day average of N1.50.
  • The fundamentals of the stock should support the recent momentum: Sterlings bank’s PBT, PAT and EPS in Q3 jumped by 30%, 38% and 33% respectively.
  • The estimated fair value of the stock should be well above the 200-day SMA. The fair value of Sterlings bank as at when I bought was N2.44, which was far above the 200-SMA and 50-day SMA. If the fair value is below, the long-term average, avoid such stock, reversal is imminent.
  • The price should be trending in the last 1, 3, 6months before the golden cross. Sterlings bank year to date performance was 60%+ before it made a golden cross.

Sterlings Bank:

The stock went from N1.6 to N2 in weeks, that’s 25% return.

Away from Sterlings bank, here are some other stocks that made golden crosses recently and their recent performances:

Newrest ASL (Airservice)

 

I bought Newrest ASL at 4.95 after the stock made a golden cross (see my analysis here some days after purchases) in September 2018. As of this write-up, the stock price is N6.9, 39% profit in 2 months.

Newrest ASL had already surpassed its previous year financials, and from my fair value estimate, the stock should sell for N10.

As you can see, these are excellent stocks with beginnings of new momentum building. Golden cross mixed with fundamental analysis is a great short-term strategy that works in a bullish or bearish market.

 

This Short term Investment Strategy Offers Higher Return above T-Bills

Short term Investment Opportunity in Nigeria with High Returns 2019 – Best High Yield Investment Options to Make Guaranteed Income from Nigeria Stock Market.

Short-term investments, also known as liquid investments, are investments that mature in 6 months to 1 year. Unlike long-term investments, which is believed to offer higher yield over time, short-term investments typically come with lower risks, no wonder the returns are smaller.

When it comes to selecting the best options for your money, there is countless advice on why and how investing in long-term securities will help you accumulate wealth. But in the course of our day to day financial life, we frequently find ourselves in need of short-term cash flows to finance immediate needs which is why we must also seek investment opportunities that won’t take decades to build up and yet offer steady, low-risk and guaranteed return.

Ordinarily, the deposit account and CBN Treasury Bills are not only considered the best ideas but had been the widely adopted short-term investment options for amateur investors. But, the statistically-proven idea shared here will help you maximize the return on the cash in your savings account.

Although, you can’t rule out the risk involved, the combination of market timing and some level of exposure to government-backed securities will surely lower your risk. The average return on your investment can vary from 15% to30% in a 5-6 months

Who is this strategy suitable for:

  • Folks with idle cash in the bank
  • Folks that are looking for high return opportunities and at the same want to preserve their capital.
  • Folks that can invest now and wait for 6-12 months before exit.

Best Short-term Investment Opportunities with Higher Return

The two best investment options are Dividend Paying Stocks and Treasury Bills.

While you are wondering why dividend-paying stocks should be considered the best place investments for short term when the cash payout is small, please note that you aren’t buying these stocks for dividend purpose but to take advantage of the institutional money that flows into stock with an attractive dividend yield, then sell before the closure date.

Typically, when a company beats its previous financial records and is expected to increase dividend payout in the current year, investors would naturally flock to the stock when it is time to pay a cash dividend to shareholders whose names are registered before the closure date. An influx like this leads to a higher share price as buyers bid on the stock ahead of the payment date.

What you should do at this point is to scout for stocks that pass my 6 checklists for picking great dividend stocks and accumulate certain units at a lower price, like 5-6 months before the closure date. For instance, most listed stocks in the Nigeria stock market release their end of the year results (December) around February and March. Dividend payment date (which will be announced) usually falls between May and June. Between January to April/May, there is what analysts call “First Half-year optimism rally” while July to November is tagged “Second Half Pessimism rally

According to a research published by the BusinessDay Newspaper on 19th, November 2018 titled: How Investors Missed Out on Decades of Easy Profit, it was revealed that, in the first half of the year since 2000, the stock market has delivered positive returns 16 out of 18 years while in the second half of the year, the market has rallied 9 times out of the 18 years (from 2000 to 2018). This means that if you were a probability driven technical investor, you will see easily that there is an 88% chance of an upside in the stock market in the first half of the year and a 50% chance of suffering a market loss in the market in the second half of the year.

If an investor invested only in the first half of the year between 2000 and 2018, he would have earned an average annual return on his portfolio of around 14.23% versus an average annual portfolio loss of around 0.58% if he only invested in the second half of the year. This performance only assumed that the investor holds in his portfolio all the companies in the stock market at a market weight, (or bought the NSE index fund).

For investors looking for short-term opportunities in the stock market, if you had invested N10,000,000 in the year 2000 in using the H1 optimistic rally strategy, you would have grown to N100,000,000 as at the end of H1 in 2018, providing you with almost 10x return. If you had done the same in an H2 only portfolio, you will be N9,590,000 as at now. (November 2018).

While some analysts have tried to give different reasons for this historical stock market rally, we believe that the market can’t come close to efficiency. For me personally, I found one particular reason for such rally which is a great opportunity for short-term players and that is dividend investing.  A lot of corporate actions are released to the investing public between February and May with the company’s shareholders’ closure date for dividend qualifications falling in the same period.

Besides, a larger number of stocks that offer attractive dividend above market average are found at this period and if you miss it, you might not find any again till the following year. So, it is natural for big funds from insurance companies, pension fund managers, asset and investment managers to chase these stocks at this period hence push the share price to the north, after the closure date, they liquidate their holding since they are already qualified for dividend payment.

This explains the usual rally you see every first half of the year. So, your entry as a short-term trader is to screen for stocks that offer attractive dividend yield above 8-10% using my 6 criteria, buy at a lower price around November and December and sell before the closure date (you will see notifications under corporate action). This strategy can net you a modest 15-30%.

Where will I invest for the remaining part of the year? you can explore the money market by investing in Treasury Bills or put your money in a safe fixed income mutual fund with positive historical track records.

While this short-term investment opportunity in Nigeria has been proven to generate impressive returns over an 18 year period, it is not devoid of risk, hence, due diligence is required when picking Nigeria stocks to buy.

If you follow my guide on how you should invest your money, this short-term opportunity is suitable for young and aggressive investors below 40 years and not for aged folks.

Which Low-Risk Mutual Funds Should You Invest In?

Best Mutual Funds in Nigeria – Top Performing Managers to Invest In Nigeria – Choose Equity-Based Fund, Money Market Funds or Fixed Income Funds for your Money in 2018, 2019, and 2020

I had earlier shared a guide on how a novice can start investing in the Nigeria stock market without getting involved in the day to day business and the best way to get started is via a regulated and registered mutual fund manager.

Mutual fund managers are considered professionals who understand and have been trained in stock market investing.

I also mentioned some of the mutual funds to consider based on their past performance in 2017.  Please note that these mutual funds are equity-based managers who invest in stocks and as such come with a higher risk of exposure to the stock market volatility. Just like we saw these funds deliver up to 52% in  2017 as investors drove the market to a peak level, the risk of sell-offs had also dragged their net asset value to the south.

The overall NSE index is down by 16% with all the 10 equity-based mutual funds following the same path.

According to Financial Vanguard, FBN Nigeria Smart Beta Equity Fund, managed by FBN Capital Asset Management, a subsidiary of First Bank of Nigeria, Stanbic IBTC Aggressive Fund (Sub-Fund), managed by Stanbic IBTC Asset Management and United Capital Equity Fund, managed by United Capital Asset Management, led the negative trend with a decline of 44.5 percent, 36.4 percent and 23.5 percent respectively in their NAV.

Axa Mansard Equity Fund, managed by Axa Mansard Investments placed fourth, dropping by 22 per cent, while Stanbic IBTC Nigeria Equity Fund, also managed by Stanbic IBTC Asset Management and ARM Aggressive Growth Fund managed by Asset & Resource Mgt Company followed with 15.4 per cent and 12.1 per cent decline respectively.

Others are Frontier Fund managed by SCM Capital, Legacy Equity Fund managed by First City Asset Management and Paramount Equity Fund, managed by Chapel Hill Denham Mgt, which slipped by 4.9 per cent, 3.7 per cent and 2.3 per cent respectively.

Considering the huge risk involved in investing in equity-based mutual funds, it makes more sense for long-term investors to buy into mutual funds that had recorded consistent return in the midst of market volatility on at least 5-year horizon.

Although past performance isn’t a guarantee for future performance but to a larger extent, it helps to screen for managers that had survived various economic cycles and are considered top professionals in the investment space.

These are mutual fund managers for those that aren’t comfortable with equity risk but still want a slow and steady return above benchmark.

Stanbic IBTC Absolute Fund

This is the most consistent of all the mutual fund managers mentioned here, The fund invests in fixed income securities like Treasury Bills, Bonds, Commercial Papers, etc with an objective of providing liquidity.

Stanbic IBTC Absolute Fund has made a loss in 1 month out of 69 months ranging from January 2013 to October 2018. The average return of this fund since 2013 is 78.12% and on a breakdown, the managers generated 10.01%, 12.61% in 2014, 13.19% in 2015, 11.59% in 2016 and 18.48% in 2017. So far in 2018, the fund has gathered a YTD return of 12.33%. This means that the fund has generated a total of 78.12% return since 2013.

FSDH Coral Income Fund

The fund invests a maximum of 30% of its investible fund in the equities market while the balance is exposed to fixed income market and money market instruments. The objective of FSDH Coral Income Fund is to provide long-term capital appreciations while maintaining low to medium volatility.

The fund has lost 11 times out of 118 months and had generated 102.41% on average.

Zenith Income Fund

As the name implies, this fund is owned by Zenith Bank and had been delivering positive return since 2012. Although, the percentage return has been a single digit, inventors, looking for a balanced fund, are still well-off investing in Zenith Income Fund. The fund invests in Treasury Bills, and Bonds.

The fund has only made loss 15 times out of 82 months period.

That is all for now! If you look closely at the type of assets these funds are most exposed to, you will notice that the money and fixed income market makes more sense to low risk long-term investors.

This is How You Should Invest Your Money

Best Investment Opportunities In Nigeria for Long and Short Term. High Yield Financial Investments With Monthly, Quarterly, & Annual Returns on Your Money 2018, 2019 – Forex, Dividend Stocks, Treasury Bills, FGN Bonds.

Selecting the right investment options for your idle cash isn’t an easy one; a lot of factors should be considered especially now that the investment world is full of uncertainties.

See – How to Invest in Nigerian Banks

In this investing guide, you will learn how to pick the best investment opportunities for the long or short-term horizon based on your preference and personal appetite for risk:

Key Investing Questions to Ask:

When looking for an investment opportunity, you need to ask yourself these questions:

  • Is this investible cash a percentage of my total cash balance or everything; “home and abroad”? Assuming you have N10 million in your life savings account and are looking for long or short term investment opportunities in Nigeria, the way you would invest N1 million, which is 10% of your N10 million cash balance, will definitely be different from your mindset if the whole N10 million is to be invested. A smart investor would rather take on lower risk opportunities on N10 million investment and higher risk on N1million.
    • So, when you are looking for a place to invest in, consider the percentage of what you are investing to your life savings; lower risk for 30 – 100% and higher risk on 20% or less.
  • How old am I? As dumb as this question sounds, it is also critical to determining where to invest your cash. You would be sharing a disastrous advice if you encourage a 60-year old man to go invest 70% of his life savings in the stock market. What happens when the market crashes? that is a short route to high blood pressure.
    • So, check your age range for better portfolio rebalancing; ages between 20 – 40 can invest actively in the stock market but as you grew older to 50, fixed income securities make more sense; what you need is an opportunity that generates monthly quarterly, semi-annual or annual cash flow return.
  • What level of risk am I willing to take? Every investment comes with a risk. The risk is the possibilities that your actual return may vary from the expected outcome; it could be higher or lower. In the investment world, lower risk opportunities tend to offer a lower return while high-risk opportunities usually offer an above-average return on your investment.

If you can provide honest answers to the following questions, you will find it easier to know which investment option is right for you.

Let me share some of the best investment opportunities in Nigeria based on the questions asked earlier:

  • For someone who is willing to invest 20% of his life savings, still below 40 years and wants to get ideas for short or long-term horizon, here are my tips:
    • For short term; buy growth stocks in a sound company, trade forex or commodities market, invest in growth mutual funds or start an online business.
    • For long-term:  buy dividend stocks, and, FGN bond and fixed income mutual funds.
  • For someone who is willing to invest his life savings and above 50 years:
    • For short term: buy Treasury bills, invest in 90-days fixed deposit, and invest in fixed income money market.
    • For long-term: buy FGN bond, invest in fixed income mutual funds, buy dividend stocks in a blue chip company and insurance annuities.

This is how you should consider and screen different options before deciding whether you want to go ahead.

As a beginner or a novice who doesn’t understand some of these investment ideas, let me share a brief information about them:

Dividend Stocks:

These are stocks that pay parts of our profit to shareholders; the cash payout is referred to as a dividend. Dividend stocks are great for investors looking for cash flow and as more buyers accumulate the shares of the company, prices tend to rise. Some of the best companies that pay dividends in the Nigeria stock market are Nestle, Unilever, Zenith Bank, GTBank, UBA, etc.

See – My Checklist for picking good dividend income stocks

Treasury Bills

Treasury Bill, also known as T-bills are short-term fixed income debt instruments issued by the CBN at a regular auction. T-Bills could be 30-days, 90-days, 180-days or 364-days with varying interest rates. The higher the maturity period, the higher your return.

When you buy T-Bills through your bank. depending on the type, an interest is paid upfront and credited to your account with the principal repaid on the expiration of the investment.

For instance, If you invest N1,000,000 in a 364-day T-Bills which, as of this writing, offers 14.95% interest, N850, 500 will be deducted from your initial investment leaving you with an upfront interest of N149,500. At the end of the 364 days period, your principal (N1,000,000) will be credited back into your account.

For lower T-Bills duration like 90-days, the calculation isn’t direct as you think; let us assume you opted for a 90-day T-Bills offer of 10.2%, your upfront interest isn’t N102,000 but N25,000.

Here is how to arrive at your interest payment: 90/360 (prorate the 90 days in a year ) x 0.102 (interest percentage) x N1,000,000 invested.

FGN Bond

Every year, the federal government (FGN) drafts its annual budget which contains a forecasted expenditure and expected revenue. As a way to generate more revenue for capital and recurrent expenditures, the FGN had always explored debt market if the cash flow from oil and taxes aren’t enough. One of the debt instrument issued by the government to raise more money for long-term capital projects is “Bond”.

A bond is a long-term debt instrument issued by the government to raise money for long-term projects; we have infrastructural bonds, SUKUK bond, green bonds, and savings bond. At the state level, some state governments issue state bond to finance state projects.

FGN bond pays interest semi-annually; every six months to bond holders directly to their account up till the maturity period after which the principal is paid back.

Mutual Funds

Mutual funds are a collective investment scheme that pools resources together for a common purpose. The funds could be invested in Treasury bills, bonds, the stock market or a mix of all these opportunities. Since they are managed by regulated professionals, it is considered safe for investors with little or no knowledge of the market.

In Nigeria, you can select:

  • Equity Funds, if you have a high appetite for risk.
  • Fixed Income Fund, for T-Bills, Bonds and Commercial Papers.
  • Balance Fund, a combination of equity and fixed income opportunities.

See – Top Low-Risk Mutual Funds to Invest In

Insurance Annuities

Under annuity plan, you would be expected chose a plan and pay a fixed calculated premium on a monthly quarterly or annual basis for a specified period of years after which, the insurance company will pay you for life. This option is considered safe for all investors as its help one plan for the future. Some insurance companies like AIICO, Mansard, NEM, Custodian offers annuity insurance products.

While these are the best investment opportunities in Nigeria for short or long-term horizon, you are free to share more profitable emerging business opportunities that are not yet tapped.

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