How a Novice Made N83,551.02 Profit from 4 Penny Stocks I Recommended

There is nothing that makes one feel happier than the feedback you receive from an anonymous blog visitor, at least it validates your analysis and keep you motivated.

This is a mail to sent by someone I don’t know.

Hi Oge, thank you for independent analysis of stocks on your blog. I am newbie who has lost so much money in the stock market. It’s been long I saw my portfolio in green colour. Despite the volatility and bearish trend witness in the market last year and political uncertainties surrounding the general election this year, my overall stock portfolio is up by 5.6% as I send this email to you. Thanks to  your penny stock recommendations like LearnAfrica, Fidelity and Wema. In fact, my portfolio would have been 35% up except for an Insurance stock whose value is down by almost 30.6%.

Thank you and God bless you!

Godwin, Abuja

He started following my stock recommendations last year with keen interest to buy every stock I analyse on this blog, I remembered when he sent a mail to me requesting a one on one training but the distance was a barrier but he never gave up, instead he followed my updates on undervalued penny stocks to buy.

Continue reading How a Novice Made N83,551.02 Profit from 4 Penny Stocks I Recommended

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.

Looking for an Undervalued Penny Stock in the Banking Sector?

While everyone is cautious about buying stocks in the NSE market on growing bearish sentiments, Sterlings bank’s stock seems to have shown some resistance last week as it appreciated by 6.67% to close at ₦1.60, from an opening price of ₦1.5. This might be one of the undervalued bank stocks to buy in the Nigeria stock market.

You are strongly advised to do you own research.

The upward move in the share price isn’t unconnected to the bank’s impressive Q3 results which showed revenue, interest income and profit on double-digit growth trajectory.

As of this analysis, the stock is selling for ₦1.65 with 1-year and YTD performance now at 57.17% and 48.15% respectively.

Analysis Recent Result

Results for the 9-month ended September 2018 show that interest income increased from ₦78.6 billion in 2017 to ₦93.5 billion in 2018, 18.9% growth.

Profit before tax jumped by 30%; from ₦6.5 billion in 2017 to ₦8.5 billion in 2018. Profit after tax increased by 38%; from ₦5.9billion in 2017 to ₦8.2billion in 2018.

In summary, the bank’s bottom line was largely supported by efficient utilization of customers’ deposit on loan and over 50% reduction in impairment charges. This is coming at a time other top tier banks (GTB, Zenith, UBA, FirstBank) are cutting down on their loan book which unsuprisingly affected interest income.

The bank has a Return on Equity 10%, Return on Asset of 1% while Net Interest Margin is 7%

Customer’s deposit, a measure of customers’ confidence in the bank, also grew by 5% to ₦723 billion from ₦684 billion. This also translated to increased lending to the private sector, as loan and advances to customers increased from ₦662 billion from ₦598 billion.

OPEX increased by 54% as the bank incurred more cost on administrative expenses.

Cash generated from operations on the Q3 report is ₦7.6 b (compared to a negative cash flow ₦100 billion in the previous comparable period)

Technical Analysis

Sterlings bank share price is trading for ₦1.65, above its 50-day average of ₦1.52 and 20-day moving average price of ₦1.43.

Generally, a stock is bullish on a short and long term when its share price is above 50-day and 200-day moving averages respectively.

With the price showing a recent cross above the 200-day SMA of ₦1.50, Sterlings bank might be set for an impressive long-term bullish run

undervalued bank stocks to buy


Sterlings bank reported a 9-month EPS of 28k, which is 33% more than the EPS of 21k in the comparable period (2017).

Using an adjusted discount rate of 15%, an assumed zero growth on TTM EPS of 37k we assign a fair value of ₦2.46 to the stock, which is 49% above the current share price of ₦1.65.

Besides, the banking stock has a forward PE ratio of 4.45 which is below industry average; there is room for upside.

Market update

No update on


We assign a BUY rating on Sterlings bank’s stock.

About Sterlings Bank Plc

Sterling Bank PLC provides banking products and services to personal and business customers. The Bank offers services in corporate/commercial banking, retail & consumer banking, financial investments and management services, capital markets, insurance, and other financial services.

Top Gaining Stocks to Watch Closely Next Week

The NSE All-Share Index and Market Capitalization depreciated by 2.38% to close the week, November 2nd, 2018 at
32,124.94 and N11.728 trillion respectively.

Similarly, all other indices finished lower with the exception of the NSE ASeM index that closed flat.

  • NSE Consumer Goods Index (-2.72%)
  • NSE Premium Index (-3.09%)
  • NSE Main Board Index (-1.73%)
  • NSE ASeM Index (0.00%)
  • NSE 30 Index (-2.39%)
  • NSE Banking Index (-0.38%)
  • NSE Insurance Index (-2.96%)
  • NSE Consumer Goods Index (-3.25%)
  • NSE Oil/Gas Index (-7.8%)
  • NSE Lotus II (-2.81%)
  • NSE Industrial Goods Index (-4.06%)
  • NSE Pension Index (-2.86%)

Here are top gaining stocks for the week:

  • Presco Plc – The stock price increased from N53 to close the week at N59.85, 12.92%
  • Neimeth International Pharmaceutical Plc – The stock price increased from 54k to close the week at 60k, 11.11%
  • Consolidated Hallmark Insurance Plc – The stock price increased from 30k to close the week at 33k, 10%
  • Newrest ASL Nigeria Plc – The stock closed the week at N6.6, from N6 representing 10% growth in 7 days.
  • C & I Leasing Plc – The stock started the week at N2.55 and appreciated by 9.8% to close at N2.80.
  • Livestock Feeds Plc – The stock opened at 52k and appreciated to 57k, representing 9.62%.
  • International Breweries Plc – The stock price went from N31 to close the week at N33.55, 8.23%
  • Learn Africa Plc -The education stock opened at N1.10 and close the week at N1.18, 7.27%.
  • Mutual Benefits Assurance Plc – The insurance stock started the week at 28k and appreciated to 30k, 7.14%.
  • Sterlings Bank Plc – The banking stock also appreciated by 6.67% to close the week at N1.6, from the N1.5 opening price.

(Source: NSE)

Stocks to Watch:

  • Newrest ASL Nigeria Plc

The company released its Q3 results with revenue and profit jumping to the roof. Based on the 42% increase in top line and 293% growth in Q3 EPS, Newrest ASL has surpassed its 2017 full-year earnings by a wider margin.

Our TTM EPS on this stock is N1.97, which on a 15% adjusted discount rate, presents a fair value estimate of N13.

Verdicts: The stock had already risen by 10% in the last 7 days, investors might need to wait for a dip on profit taking or buy available offers at not more than N7.

Year to date, the stock is up 10.92%.

  • Sterlings Bank Plc

The bank released an impressive result with double-digit growth; Q3 revenue grew by 21%, profit before and tax after increased by 30.7 and 38.1% respectively. The bank’s customer deposit increased from N684 billion to N723 billion, 5% growth.

As a loan driven bank with loan/asset ratio of 61% (an increase from 55%), Sterlings bank demonstrated its capability to utilize customer deposits as a loan; interest income from loan and advances to customers increased by 20%, from N58 billion to N70 billion.

Based on a TTM EPS of 37k and an adjusted discount rate of 15%, we assign a fair value of N2.46, 53% upside potential from the price of N1.6.

Year to date, the stock is up by 48.1%.

Disclaimer: Please do your homework, this is not a buy or sell recommendation.

Top 7 Stocks That Could Offer Mouth Watering Returns in 2019

Best Stocks to Buy and Hold In Nigeria 2019 – Banking and Insurance Stock Recommendations In Nigeria – Best Performing Dividend IncomeStocks To Invest Your Money.

Nigeria still relies on oil as a key revenue driver but this year, the energy market has had an insignificant impact on the country’s stock market index, down year to date by 16%, despite the rising price of crude oil in the international market, now above $60 per barrel.

As we wrap up 2018 and prepare for the new year, I would like to discuss the economic indicators, and market risks that will influence equity market investment decisions and key sectors to focus on.

See – ” Sure Growth Stocks, That Started Well in 2019, You Should Buy Now

Where Are We Economically – Risk Perspective?

Nigeria relies on imported products for its daily personal and business needs as such exchange rate stability is very important to the sustainability of the economy.

This is the sole reason…

The CBN has shown its resolve to keep the Naira from weakening against the dollar at all cost, even if it’s going to starve the private sector of credit and burn through the country’s external reserve as a record price.

(Source: BusinessDay)

Foreign capital exit to high-yielding assets in the developed countries., at the same time, is expected to intensify on the back of a rising yield on US Treasuries as the Fed plans more rate hike in 2019 and growing political uncertainties which will impact the risk premium on Naira-denominated assets and put pressure on the exchange rate.

The Naira has already weakened from N360, the rate it exchanges to a US dollar at the beginning of the year, to N363.32 at the I & E windows. This, coupled with massive equity sell-offs in the local bourse, is a clear indication that foreign investors are already exiting the economy for greener pastures.

Here is a big opportunity for smart investors:

Since the CBN has vowed to protect the weakening Naira, it surely would have to find a way to reduce Naira sales at the I & E window by enticing these foreign investors with higher rates on fixed income securities like Treasury Bills and Bonds.

Using the recently concluded Auction on Wednesday, 31/10/2018, where Treasury Bills worth N145 billion were issued the stop rate on 91-day T-bills trended upwards to 10.975% compared to the stop rates at the previous auction, 10.96%, it is also visible that the apex bank has started its drive to make Naira asset attractive.

The rate of 182 days and 364 day T-bills rose to 13.49% and 14.4% respectively from 12.69% and 13.45%. I expect this to continue in the coming auctions.

With average bond yields at around 14%, the rise in T-bill yields is gradually taking us back the era of “FREE MONEY IN THE MONEY MARKET“, last seen in 2017 when the yield on short-term securities rose to 17% record level, above long-term rates. This will no doubt mount pressure on the government as debt servicing cost may rise to 69% by the end of the year.

When yields on T-bill starts rising and becomes attractive, funds that would have been channelled to private sector lending would be diverted to these safer government securities.

If CBN T-bills slow-down hurts bank’s profitability in the first and second half of 2018 financial year, it makes sense to say that the rising yield on T-bills issued will also drive the financial sector’s profitability in which the bank, insurance, and other asset managers are part of.

Offering a higher yield on short-term securities may not be the only resolves of the apex bank, it is also “upping” dollar interventions to save the Naira from devaluation but the former seems to be more effective but expensive.

Going Forward – Key Sectors to Watch in 2019


Bank lending, as shared on how bank wants to make more money, is already dipping on the account of weak economic activity and political uncertainties with big banks cutting their loan book while increasing their investment securities. In 2019, we expect banks to park more of deposit generated in T-bills.

  • My top 3 banks to watch are Zenith, UBA and GTB; they all offer attractive dividend yield and may appreciate in price.

Based on my 6 checklists for picking dividend income stocks, UBA and Zenith are my preferred dividend stocks.


Insurance companies are also expected to invest more of the net premium income generated from policyholders on these fixed-income assets. I would advise you key into profitable insurance stocks with above average return on equity and a combined ratio of less than 100%.

  • My top insurance stock picks are Custodian Investment plc (dividend and share price appreciation) and NEM (share price).

Asset Managers

Investment firms that provide investment banking, asset management, securities and insurance services to corporations, governments, high net worth, institutional and retail clients are also not left out of the interest income from rising yield on T-bills in 2019.

  • My top picks for dividend income and share price appreciation are UBA Capital and Africa Prudential

While these best stocks to buy and hold in Nigeria 2019 have had their past profitability driven by rising yield on T-bills, it doesn’t in any way imply a BUY or SELL recommendation nor negate other listed equities, you are advised to do your homework.

One of my results – I shared an analysis of Cement Company of Northern Nigeria ( CCNN ) in February and why you should buy the stock. The price has increased from N16 to hit N31, 90%+, now at N22.

This Top Gaining Catering Stock Still Has 96% Upside Potential

Investors love stocks that consistently appreciate and are still trading below their fair value estimate; we call such stock cash cow as their risk of melting down is minimal while the upside potential is high.

In my company’s analysis, I will be reviewing Newrest ASL (Airservices), a stock with an upside potential that is clearly supported by its improving financials and could reward smarter investors who key into the current price of N6. Although I started accumulating the stock at N4.95, the closing price of N6.6 is grossly undervalued when compared with its estimated fair value.

Newrest ASL Nigeria Plc provides catering and related services. The Company operates inflight catering facilities, lounges, and restaurants. Newrest ASL serves the aviation industry operating in Nigeria.

See – How I Pick Penny Stocks To Trade

The stock is up by 10.92% on YTD as investors increase their bid in today’s trading after Q3 results were released.


Newrest ASL has just released an impressive Q3 2018 results with revenue coming out at N4 billion against N2.8 billion reported in 2017, representing a 42%.

On a breakdown, revenue growth was largely supported by Inflight catering services from Lagos branch, Handling and Laundry services. The company also commenced catering services to local flights and industry which contributed a significant N93million value to the top line.

Gross profit margin fell marginally to 65% (from 67%) but well above industry standard.

Operating margin, which was negative in the previous comparable period, was also impressive at N402 million while profit after tax increased by 191% to N1 billion respectively.  Interestingly, the company had surpassed its 2017 record profit of N428 million.

Return on Equity, a measure of how the firm utilized shareholders’ fund also increased to 22% against a paltry 8.5% in 2017 while exposure to debt was scaled down as debt to equity declined from 40% to 33%.

The liquidity position of Newrest ASL as indicated by current ratio increased to 3.6 from 2.7′; the company can settle its short-term obligations with its working capital.

Cash generated from operation fell from N1.7 billion to N902 million.

Technical Analysis

The stock closed at N6.6 which is above its 20-day and 50-day moving average of N5.99 and N5.57 respectively. Technically, the stock is bullish on short-term as long as the 20-day moving average is above the 50-day MA.

While the share price is above 200-day moving average of N3.38, long-term sentiments are also positive.


Newrest ASL didn’t only reported a 293% growth in Q3 EPS, from 44k to 173k but also surpassed previous year’s EPS of 68k. Using an adjusted discount of 15% on TTM EPS of 197k, we assign a fair value of N13 to the stock which, when compared with its current closing price of N6.6, represents 96% upside potential.

From our end, we assign a BUY rating on the stock.

Why Caverton Offshore Is a Penny Stock to Watch Closely

As of this writing, Caverton had just released its Q3 2018 earnings report with key metrics indicating that the company is on track to beat its previous year record.

The stock is selling for ₦1.91 with a YTD performance of 48.06%.

Recent Result

Results for the 9-month ended September 2018 show that revenue increased from ₦14.8 billion in 2017 to ₦23,1 billion in 2018 while operating expenses also increased to ₦14.7billion (from ₦9.7billion).

The revenue was driven by 61% growth in contracts from Aeroplane and Helicopter services.

Profit before tax jumped from ₦1.8billion in 2017 to ₦2.8 billion in 2018. Profit after tax followed suit; from ₦1.1billion in 2017 to ₦1.6 billion in 2018.

Return on Equity grew from 6.9% to 10% while Debt to Equity expanded from 1.9% to 2.3%. Although interest coverage above 2 means that the company still pay its interest obligations from operating profits, the gradual accumulation of debt should be closely watched.

Cash generated from the operation on the Q3 report is ₦10.9b (compared to ₦2.3b)

Technical Analysis

Caverton, as of this writing, is trading for ₦1.91, above its 50-day average of ₦1.90, but below 20-day moving the average price of ₦1.92. Technically, the stock may have turned bullish as indicated by the moving average crosses, backed by the company’s impressive fundamentals.

The long term sentiment is clearly bearish, except the price surges past its 200-day moving average of ₦2.24


Caverton reported a 9-month EPS of 48k, which is 33% more than the EPS of 36k in the comparable period (2017).

Using an adjusted discount rate of 15%, an assumed zero growth on TTM EPS of 89k we assign a fair value of ₦5.93 to the stock, which is 337% above the current share price.

Market update

No update on Caverton.


We assign a BUY rating on Caverton’s stock.

About Caverton Offshore Support

Caverton Offshore Support Group Plc operates in the marine and aviation logistics sectors of the Nigerian oil and gas industry.

How Nigerian Banks Want to Make More Money

How Do Banks Make Money in Nigeria – Analysis of Banking Stocks In Nigeria Stock Market and How They Make Money From Loan, Treasury Bills and FGN Bonds

Understanding the business of banking isn’t an option for investors looking for good banking stocks to buy but a required process that will help you uncover and weigh profit opportunities and inherent risks.

It is easier to say that banks accept deposits from individual and corporate customers and lend to borrows at a higher rate or invest in fixed income securities but knowing which of these categories accounts for 80-90 of the profits declared is critical to selecting the right bank that is positioned to make more money and pay higher dividend per share.

A bank can be loan driven if it gives most of the money generated as deposits to qualified borrowers at a higher rate while paying less as interest expenses. On the other hand, an investment-driven bank is one that is constantly increasing and investing deposits in fixed income securities like CBN Treasury bills, FGN bonds or other risk-free securities. The return on these two (2) income-opportunities is called “interest income”

As more banks deploy advanced technology infrastructures to ease transaction processes like payments, transfers, account inquiry and statements, the fees and commissions, earned on transactions performed on their platforms, are called non-interest income.

I won’t be talking about non-interest income.

How is your bank making money?

Before investing in a bank’s stock, I always take my time to understand their key revenue drivers and align with banks that are well positioned to grow their bottom line based on economic realities.

As of this writing, some banks had just released their 9-month results and it makes more sense to use their recent results to know whether they are loan or investment-driven, this will help me analyse their revenue opportunities and industry risks.

The three key metrics to focus on are the customer deposits, loan to deposits, and loan to assets ratio.

  • Customer deposit reveals the cash held on behalf of its customers, both savings, current and term deposits.
  • Loan to deposit ratio shows the proportion of the customer deposit that is advanced to customers at a higher rate.
  • Loan to asset ratio shows the proportion of the bank’s total asset that is advanced to customers.

Guaranty Trust Bank

GTB in its Q3 results reported a total asset of N3.4tr against N3.3tr in 2017. A breakdown of the total asset showed that N1.27tr was advanced to customers compared to N1.44tr in the previous comparable period, a decrease of 11%.

The bank’s loan/asset fell from 43% to 37% which shows that it is cautious in its lending to the private sector. Investment assets stood at N598 billion against nil figure in 2017.

GTB generated more cash as the deposit grew from N2tr to N2.2tr.

Loan to deposit ratio, a metric that tells us the percentage of customer’s deposit that is advanced to borrowers, fell from 72% to 57%.

While GTB is still a loan driven bank, we can easily deduce that the bank is lowering exposure to loan risk and investing more in fixed income securities.

Watch out for rising yield as inflation and economic risks increase; this might be another opportunity to key into the bank’s stock in 2019.

Zenith Bank

Zenith bank, in its Q3 results, grew its customers’ deposit to N3.2tr (from N3tr) which is 6% growth.

The total asset as of September 2018 was N5.6tr, up from N5.1 in 2017. A breakdown of the bank’s asset showed that it has reduced its exposure to loans and advanced to N1.8tr, from N2.1. Loan/asset ratio as 25% (compared to 41% in the previous quarter).

The loan to deposit also fell from 70% to 56%.

The bank, from my analysis, is also cautious of private sector lending, rather it is gradually investing more in CBN treasury bills as evident in additional N100b injected in the short-term securities.

United Bank for Africa (UBA)

The bank in its Q3 result reported a total asset of N4.5tr, up from N4 in 2017. A break down of the bank’s asset showed that loan and advances to customers fell from N1.6tr to N1.5tr while investments securities were shored up to N1.5billion against N1.2 billion.

Loan to assets ratio is at 33% against 40% in the previous comparable period.

Based on the Customers’ deposit,  which grew from N2.17tr to 3.1, loan to deposit ratio stands at 48% (compared to 59% in 2017).

Access Bank

The bank, as of this writing, reported a total asset of N4.3tr against N4.1tr in the previous comparable period. Out of this value, loan and advances stood at N1.97tr, a slight decrease from N1.99; the bank is still focused on private sector lending.

Based on data presented, loan to asset ratio fell from 48% to 45%

Deposits from customers increased from N2.2tr to N2.4, hence, loan to deposit ratio was 82% as it maintains stance on increasing interest income from loan portfolio.

Investment securities as at the reporting period were N446 billion, up from N276 billion.

In summary, Access bank is more of a loan-driven bank but gradually building up its investment securities to take advantage of the free money in the fixed income market.

From my analysis, you will notice that Tier 1 banks are lowering exposure to loan risks, and expanding their fixed income portfolio. A smart investor should pay attention to economic risks, the biggest driver of yield in the fixed income market.

When economic risks are high, investors clamour for high yield on FBN bonds and CBN treasury bills to compensate for the risk and such earn more.

As banks build their fixed income portfolio, it is a clear indication that they want to make more money from the fixed income market and less from loan and advances, since it comes with a greater risk.

This Bank’s Stock Has a 33% Upside Potential.

Wema Bank Annual Reports & Analysis of Banking Stocks – See My FInancial Result Analysis of Wema Bank and Fair Value Estimates Using Q3 2018.

NSE banking index has been worst hit by market sell-offs and we already know why: the effect of fallen yield on fixed income securities and cautious lending to the private sector, hence lower loan and advances.

Amidst these risks, Wema bank seems to be the only short-term penny stock in the banking stock I’d love to buy and resell in 2-3 months. Here is why:

The bank had just released its Q3 earnings report with key metrics showing double-digit growth.

The stock is selling for 63k with its YTD performance of 30.77%.

In January, Wema bank had an explosive run from 46k to ₦1.48, 221% growth but had since fallen to a year low.

Month to Date, the stock is up 15% which is the second month the bank stock closed higher, a sign that investors may have started accumulating the stock again.

Recent Result

Results for the 9-month ended September 2018 show that interest income from loan disbursements grew from ₦37.4 billion in 2017 to ₦38 billion in 2018 while interest expenses declined to ₦23billion (from ₦25.2billion).

Net impairment loss on financial increased to ₦477.04 (from ₦255.6), a development the bank needs to watch and manage closely.

Profit before tax jumped from ₦1.7billion in 2017 to ₦3 billion in 2018. Profit after tax followed suit; from ₦1.5billion in 2017 to ₦2.6 billion in 2018. Thanks to the well-managed operating expenses.

Wema bank generated ₦362.2b deposit compared to ₦250.9b, an increase that is tied to the bank’s growing subscribers on ALAT mobile banking app.

While tier 1 banks like GTB, UBA, and Zenith reported a lower loan and advances to customers on cautious lending, Wema bank is strategically increasing her loans to private sectors. This is evident in its recent partnership with the development bank of Nigeria.

Loan to deposit fell from 84% to 67% as the bank looks to explore the fixed income space; asset held for trading increased from ₦4.3b to ₦12.2billion.

Cash generated from the operation on the Q3 report is ₦53.3b against a negative figure reported in a similar period.

Technical Analysis

Technically, Wema bank stock’s price is below its 20-day price of 66k and 50-day moving average price of 75k which suggest bearish sentiments. As price approaches its 20-day average price, the bank’s stock may be set for some rally on the recent impressive result.

The long-term sentiment is clearly bearish, except the price surge past its 200-day moving average of 76k.


Wema bank reported a 9-month EPS of 9.2k, which is 73.5% more than the EPS of 5.3k in the comparable period (2017).

Using an adjusted discount rate of 15%, and a projected year-end EPS of 13.2k we assign a fair value of 88k to the stock, which is 33% above the current share price.

Market update

The bank announced its partnership with development bank of Nigeria (DBN) to help small businesses access to cheaper loans of up to ₦600 million.


We assign a BUY rating on Wema Bank’s stock on the back of increased interest income from loan and advances and expected rise in yield on fixed income securities.

About Wema Bank

Wema Bank Plc provides commercial banking services. The Bank offers retail and corporate banking services, trade finance, treasury as well as foreign exchange operations.