How to Pick Stocks In a Bearish Market

How I Pick Nigerian Stocks To Buy In a Bearish Market – Learn How To Analyse The All-Share Index Using Technical Analysis and Pick Fast-Rising Stocks

The Nigerian stock market seems to have lost the momentum it gathered at the beginning of the year. As of this writing, the YTD performance of NSE index is less than 5% compared to the impressive 16% return achieved.

What could have been the driver of the bearish market? Some analyst attributed the fall to normal market correction, others felt there is no major news that could support the next bullish run. I had earlier expected the upward trend in the oil market to be a key supporting factor but as the price of oil inch higher every week, the market seems to have taken a “U” turn. My next question is “should one sell-off existing stocks and wait for a bullish signal “? and How can one pick a good stock in a bearish market like we are seeing now?

For traders with existing stocks, I believe it’s time to cut your loss and cash out as the bearish market trend. Take a closer look at the chart below, the market sell-off seems to be stronger every day.

Maybe you should look into my low-risk and high yield investment ideas right now pending when the stock market will bounce back.

pick stocks in bear market

This chart may look confusing to you but if you had bought my trading strategy course on “Little Secrets that Make Big Money In Stock“, you should be able to understand the market trend displayed on the chart above.

The summary of this chart is that NSE all-share index may go down further as pointed out by the MACD and DMI. We could see the index fall to 38,000 level as selling pressure continues to increase week by week.

According to BusinessDay (publication on May 28th, 2018), this bearish trend is connected to a massive repatriation of the foreign portfolio as the yield on US 10-year bond rises to 3-year high above 3% following the US interest rate hike to 1.75%. Ordinarily, a rate hike in a country attracts investors to fixed income securities, so this is a normal capital flows that affect emerging markets more. Another factor is the political tension and party congresses as the country’s election draws near, besides, the USD/NGN exchange rate is under pressure right now: the naira has depreciated to N368 from N360 in the investors and exporters window.

To address the second question which is “How can one pick stocks in a bearish market”, I would be discussing my top 2 stocks to watch closely this year. They are Cement Company of Northern Nigeria (CCNN) and BetaGlass. From the time I recommended these stocks, the former has added N6-N10 to its share price while the latter has added N4-N5. What caught my attention to these two stocks is that they keep hitting new highs as the general market witnesses further sell-offs.

A stock that keeps gathering momentum in the midst of stronger bearish market is worth looking into, there must be something peculiar only few traders are seeing. While a good number of stocks are falling off the cliff, creating more south-ward space away from their the green territory, CCNN and BetaGlass have continued to top gainers chart, and eventually, become investors’ appetite.

Well, you could be partly right to attribute the performance to fundamentals, but I rely more on technical when picking stocks in a market like this.

As a smart trader, here is what I do to find great stocks in a bearish market:

  • Check the overall market performance and bearish sentiment.

The NSE market index began its bearish run in February 2018 after it posted an impressive run of 16% in January. The market has since dropped from a peak of 45,000 basis point to 40,213, that’s like 12% off the 16% to bring the YTD return to 4.9%.

  • Look for stocks that are showing bullish strength in the same period.

Sincerely, it is very risky to play in this type of market. If you do, you are already going against the first general trading principle. don’t trade against the trend, the trend is your friend, so why make the trend your enemy? If you insist, then don’t trade what you can’t afford to lose.

The NSE market index is down by 12% in the last 4 months (February – May), but here is a stock that had also increased in the same period.

pick stocks in bear market

BETA GLASS is a company that manufactures and sells glassware. The Company provides glass bottles and containers for soft drinks, wine and spirit, pharmaceutical, and cosmetics companies.

The stock, as of this writing, has gained close to 17% in the same 4-month period the NSE market index lost 12%. From the chart above, BETA GLASS has continued to post a positive monthly return since the start of the year, rising from N52 in January, crossed February, the exact month all-share index showed a sign of sell-off, to hit an all-time high of N87.

BETAGlass is currently trading for N83 per share with YTD return of 56.6%, a clear market-beating figure.

See – How I Make Money Trading Penny Stocks

  • Check Fundamentals of the stock

Even though I employ technical analysis when picking stocks in a bearish market, it doesn’t mean that that the fundamentals of the stock doesn’t matter, at least, your selected stocks should be posting good numbers on key line items. This will help you avoid pump and dump stocks that are only growing on one-time news.

Read my guide on how to analyse the quarterly result of a company. You will have a better understanding of fundamental analysis.

  • Is this the time to buy?

BETAGLAS stock may be due for reversal; all indicators on the monthly chart point to an overbought stock; expect a sell-off as traders look to take profit soon.

pick stocks in a bear market

On the daily chart, MACD bearish crossover is a warning sign that BETAGlass stock sell-off is imminent, so I would advise you to wait for a bullish sentiment as long as the fall doesn’t exceed the general market index.

pick stocks in a bear market

Back to my question, is it the right time to buy? No, wait for a pullback and ride the next move once MACD bullish crossover surfaces on the daily chart.

In summary, this is how I pick stocks to buy in a bearish market and I hope you would find this guide useful for trade decisions. But like I said earlier, this strategy isn’t devoid of risk, you may lose you cash.

4 Investment Opportunities in the Banking Sector You Can Explore

How To Invest In Nigerian Banks – Learn The 4 Best Investment Opportunities In Banking Sector -Fixed Deposits, Commercial Papers, Mutual Funds and Stock Trading 

A lot of people thought that banks are financial institutions designed to only accept a deposit/mobilise funds for savings purpose and make it available to their customers upon request, they don’t that know beyond the normal savings and withdrawal services, there are investment opportunities offering better return compared to the paltry 2-3% interest income.

See – 4 Top Investment Apps You Should Download for Higher Returns Than your Bank

In this dynamic environment, where the price of essential amenities is constantly surging higher every day, you can’t afford to be mediocre or allow the value of your savings gets wiped out by inflation which, as of this writing, sits at 13-14%. Rather than allow your bank take your money, pay your 2-3% interest and advance your cash to corporate customers at a higher interest of up to 22%, there are alternative investment options you can try now.

This article explores practical ways you can invest in Nigerian banks at moderate risk and earn returns on your investment.

See – How to create multiple streams of passive income for yourself even if your salary isn’t enough.

How to invest in Nigerian banks – 4 Opportunities to Explore:

  • Fixed deposits 
  • Commercial papers
  • Mutual Funds
  • Stocks

Investment in Fixed Deposit

If you are a customer who operates a savings or current account with a bank, you can take advantage of the returns on fixed deposit by transferring your idle cash balances; funds you may not need in 3-6 months. All you need to do, send a letter to your bank requesting for a certain sum of money to be transferred to a fixed deposit, duration and effective date. The minimum tenor of fixed deposit investment is usually 30 days but the maximum depends on the bank. Interest on your principal is calculated on a simple interest basis. Also, the total interest-earning accumulated over the investment period is subject to a withholding tax of 10%.

Commercial Paper

 Commercial papers are unsecured promissory note issued by a company to holders – such short-term debts are used to finance other short-term liabilities. You need to approach your bank to inquire about this investment and the terms of the arrangement. Usually, commercial paper is issued by banks with stable earnings or companies that have a good credit history.

Mutual Funds

This is one of the best short-term investment available to bank customers in Nigeria. Most banks operate a mutual fund, a financial window that mobilises funds from interested investors and pays a guaranteed interest on a monthly, quarterly or annual banks. The interest payable to account holders are determined by NIBOR, Nigerian Inter-Bank Offer Rate – the rate bank lends to one another.
 

Stock

If you are looking for a higher return opportunity compared to other windows mentioned above, the stock exchange market is the floor to play in. While investing in banking stocks comes with its own risk, the reward can be huge when you do a thorough analysis your bank’s future potential compared to its present stock price.

Aside from price appreciation, you can also earn a dividend on your equity shares.

See my detailed guide on how to analyse and pick banking stocks.

Final note

Before you invest your fund in Nigerian banks, please consult your financial adviser for more details.

Top Gaining Stocks To Watch Closely This Week, 14th May, 2018

The NSE All-Share Index and Market Capitalization depreciated by 0.48% to close the week at
41,022.31 and N14.860 trillion respectively.

Similarly, all other indices finished lower with the exception of NSE Premium, NSE Banking, NSE
Insurance, NSE Oil/Gas and NSE Lotus II indices that appreciated by 0.35%, 0.45%, 0.83%, 0.13%
and 0.34% respectively while the NSE ASeM closed flat.

As usual, I pick recommended stocks, using a combination of technical and fundamentals every week, that will sustain their momentum from a pool of previous week’s top gainers. I believe that stocks that post a weekly gain in the midst of a bearish market are investors toast, so why waste time on just financial statement analysis when I can use my technical tools to pick fast-rising stocks with strong potentials.

If you have checked my best stocks to buy and cash out by year-end, (see here) you will notice that they are currently selling at a high price per share.

Okomu Oil

Okomu oil closed the previous week N90 (from N81, 11.11%). The stock has been trending upward after the company released an impressive Q1 result:

  • 21% revenue growth,
  • reduction in cost to sales ratio from 20% in Q1, 2017 to 8% in Q1, 2018
  • a significant increase in gross profit margin to 90% from 79%
  • PBT growth of 18% and PAT growth of 13%.

top gaining stocks

The possibility of Okomu oil share price touching the N100 mark isn’t far again as all indicators on my chart reveal a strong bullish trend.

Caverton Offshore Support

Caverton closed the week at N2.61, from N2.4 (8.75%). The company had just confirmed the commencement of its contract with Chevron to provide logistics services to the oil company. This is one of the stocks that is directly correlated with the oil market; a bullish oil price brings in more money to Caverton’s clients, hence increase the possibility of sustained cash flow and contract renewal.

In its latest Q1, 2018 result, the company witnessed a drop in its top line as a result of non-renewal of its contract but this isn’t going to impact overall performance as the newer contract from Chevron-NNPC JV is believed to provide much buffer and cash flow.

top gaining stocks

Technically, Caverton stock has just shown a crossover on RSI and MACD indicators; possible bullish signal investors can quickly use to enter now. The possibility of Caverton closing above N3 is near.

What I noticed on these two stocks is that their volume growth witness in the last two trading days of the previous week was huge; a sign that new buyers may have taken a position ahead of capital appreciation.

Disclaimer: This is my personal opinion on stocks to trade and not a buy/sell advice, consult your financial analyst for more details.

This Mutual Fund Makes More Money When Naira Loses Value

Where to Invest Money In Nigeria During Economic Collapse – Learn The Best Mutual Funds Investment Opportunities During Economic Recessions.

So far, the Dollar to Naira exchange rate has been stable for more than 10 months now, a positive trend that is directly tied to the bullish oil market, increasing foreign reserve and the introduction of an alternative and highly liquid FX market; investors and exporters window where the exchange rate is market driven.

Foreign investors confidence in the economy is also at an all-time high, at least you can see from the data presented on my post on how to make money from the stock market even when you can’t trade yourself.

Nigerian is no doubt an oil-driven economy, the short-medium term bullish oil price is the major factor driving the overall economic growth; thanks to the OPEC decision to cut production quota in 2016.

The US proposal to withdraw from the IRAN nuclear deal is another supporting factor that is believed to have driven the commodity market to newer higher (above $75), the market has already priced the possible US pull out knowing that Donald Trump had continuously criticised his predecessor on IRAN Nuclear Deal.

All these are big reasons, analyst are bullish on the crude oil in the short-medium term.

As of this writing, CBN foreign reserve is at $47b mark, a result of greenback supply from crude sales, foreign direct investment (FDI) (into the financial market) and sales of EURO bond, the federal government alternative source of funding infrastructural development at a lower interest rate.

While this news is attracting hot money into the economy and positive for NSE investors, it is no doubt exposing the economy to a greater risk that could outweigh the benefits if diversifications are on FG priority list. A larger percentage of the FDIs aren’t invested into long-term or developmental projects, but are channelled towards the financial market; these foreign portfolio managers are looking for short-medium returns from the equities and bond market.

The big risk here is that these foreign funds can easily be withdrawn from the financial market if an unfavourable news ( like Oil market fall, possible resumption of attacks on oil facilities in Niger Delta or political instability) breaks out.

Looking at historical trends when the CBN reserve growth was stalled and FDI suffered setbacks on oil production coupled with the fall in Oil price to an all-time low, we saw how the greenback (dollars) exchange rate to the Naira increased significantly to N500, a level that made importation difficult.

The stock market at that point fell as investors pulled out fund to a safer haven, capital flight was an everyday activity as foreign companies repatriate capital (in USD) back their home country while manufacturers restored to local farmers to sustain their business. The period was indeed a tough one.

However, even in tough and rough financial markets, you might ask, can one still find alternative profitable investment opportunities in Nigeria? My answer is “YES”

For those looking for opportunities in tough times, here is a look at the best-performing mutual funds to channel your funds to when the Dollars to Naira exchange shows another sign of increase:

FBN Nigeria Eurobond USD Fund

Although, it is usual that during an uncertain difficult period in Nigeria where USD/NGN exchange rate is rising faster, investors tend to buy into fixed income investment opportunities like the bond, and treasury bills. But, smarter investors like us invested in FBN Nigerian Eurobond, a USD denominated fund, a better place to invest to explore double return. The reason isn’t unconnected to the fact that the fund is fully invested in USD denominated debt instrument which doesn’t only offer a fixed interest income but enjoys a higher income from translation gain.

Translation gain is the gain that results when amounts stated in one currency are translated into another currency. Assuming you invested $1000 ($ = N305) into FBN Eurobond in 2014 with an annual interest rate of 7.5%, that’s like $75 receivable on your investment.  As of this writing (2018), a USD = N360, that’s like an additional N55,000 added to your portfolio (N360,000 – NN305,000) and  N108,000 ($75 x 4 x N360) interest income.  You will notice that a major percentage of your portfolio gain will come from the forex conversion.

The profitability of this investment idea depends on the USD/NGN exchange rate, you are highly advised to always follow the oil market closely, economic and political activities for guidance on how the dollar exchange rate will play.

Personally, I feel this is one of the reliable fixed income investment (where to invest money in Nigeria during economic collapse) any parent can subscribe their kids to, why? despite the introduction of the investors and exporters windows, Nigerian is still an oil economy and such dependency makes us prone to a sudden economic shock, that may scare foreign investors.

How You Can Invest In US Real Estate Market Without Buying Properties

Investing In US Real Estate Market For Foreigners – From Nigeria, Canada, UK, Australia – Foreign Property Investment Guide To Make Low-Risk, Steady Dollar Dividend Returns
This guide is focused on helping foreign retail investors in Nigeria, Canada, UK, Australia or any other foreign countries, who would love to earn a steady income from American real estate market but do not have the capital to buy properties.
Housing is one the biggest driver of wealth in the US. A lot of investors who took advantage of the real estate crash in America are currently reaping a significant return on their purchases, over 300% in more than 10 years, as home prices have rebounded and risen above its pre-market crisis level. As home purchase prices soar higher on a monthly basis, it is even more difficult for first-time investors with less cash to enter the market. In this article, you will see how to explore property alternative investment options that will guarantee safer and quicker returns without following the due process of investing in physical properties.
Let’s quickly do a brief review of US housing market and where the low-risk, high-return opportunities for foreign investors who don’t have millions to buy homes or invest in property, yet still want to earn great returns from the booming housing market.
Please note that I wrote this guide in 2016 when I discovered these opportunities, I will try to update most of the data here to reflect the housing market trend in 2017 and if you feel some data aren’t close to market realities, please share your comment.

Top Performing Stocks To Watch In 2018

The NSE All-Share Index and Market Capitalization depreciated by 0.06% to close the week at
41,218.72 and N14.931 trillion respectively.
Similarly, all other indices finished lower with the exception of NSE Premium, NSE Banking, NSE
Industrial goods, and NSE Pension indices that appreciated by 0.12%, 1.56%, 1.06% and 0.21%
respectively, while the NSE ASeM closed flat.

We are still not deviating from our usual practice of picking stocks to watch from a pool of top gaining stocks that made investors money last week. But, here is a catch about my recommendation this time:

The two stocks are not only a pick for short-term play but have always been top performers in their industry, besides, they are one of the best Nigerian stocks to buy and hold for the rest of the year.

Cement Company of Northern Nigeria (CCNN)

When I shared a detailed guide on how to pick the best-performing stocks to buy in the stock market using a detailed top-down approach, CCNN was my recommended stock which as of now has added N6 to the share price N16 traded at that time. The stock is up more than 100% YTD, the top performing stock so far.

Last week, CCNN emerged as one of the top gainers with 14.62% share price appreciation to close at N22.35 against the week open of N19.50.

The recent Q1 result revealed a lot about the positive outlook of this stock; Sales was higher by 24%, on the back of increasing volume compared to Q1, 2017 while EPS grew significantly to 0.86 (111%), 9% below the company’s single-quarter best of 0.95 recorded in Q4, 2017. Some analyst had already forecast a 2X annual EPS for 2018 if the company maintain this momentum.

top gaining stocks

Technically, the stock is bullish with limited upside. I’d advice you wait for profit-taking before riding the next move as it’s close to overbought already. But, if you don’t mind the short-term reversal and would like to play the cement stock between now and end of the year, you can buy now.

BetaGlass

The stock started the year at around N52 per share but is already close to N90 mark, it gained 10.20% to close the week at N83.2.  As of this writing, it’s one of the stocks trading at 52-weeks high; no resistance for now.

Looking at the Q1, 2018 result, the fundamentals of this stock remain strong.

top gaining stocks

Technically, Betaglas is bullish on all chart intervals; daily, weekly and monthly.

Best Low-Risk, High Return Fixed Deposit Investments You Didn’t Know

Best Investment Opportunities In Nigeria – Where To Invest Your Money With High Return, Low Risk – List Of Untapped Fixed Income Financial Opportunities This Year.

When I drew the business model and jotted-down content ideas of this blog, I never considered alternative fixed income investment opportunities as a category to be added too soon, but as a flexible investment entrepreneur who listens to the subscribers’ request, I felt it isn’t a bad idea to talk about the investment options you can explore (amidst rising cost of living) beyond the stock market but with key focus on risk tolerance and capital protection. Besides, it is not everyone that can swallow the risk that comes with stock investing.

My focus on risk here means that I would be screening investment options strictly on legal, risk level and return potential; I can’t undertake a long or short term investment that wouldn’t let me sleep well at night, if it’s going to make me get worried, then I won’t give it a try, that’s my mantra.

I had some idle cash that generated from financial services rendered to a corporate client and decided to scout for the best alternative investment opportunities in Nigeria offering high-return above and twice the inflation rate of 11 – 13% in 360 days with the lowest risk of capital loss. This time, I wasn’t going save the cash and allow my bank use it for business nor go for the fixed deposit investment return option of 8 – 9% p.a offered by our local banks, I wanted something better than bank and money market rates. Besides, my benchmark rate was set at 15% per annum (the average inflation rate figure as of this writing) which makes it even more difficult to find a financial investment opportunity offering such a higher return at low risk.

From 2014-2017, 1-year treasury bills offered up to 22% but as economic risk reduces on the back of a bullish oil market and stable exchange rate, it went down to 15%. So, if you had been a firm believer of TBs as the best-fixed income investment, you probably should re-think your portfolio allocation.

The only investment that could possibly beat the inflation rate of 11-13% is the one invested in professionally managed equity mutual fund with a track record of impressive positive performance. Some of these funds posted up to 52% return on investment in 2017; if you had invested N1m, you would have ended the year with a portfolio value of N1.52m.

You know what? I still wouldn’t give it a try because the stock market isn’t devoid of risk, this is not cash I would love to expose to share price fluctuation in short-term. After all, a lot of equity mutual funds also posted a negative return.

Mutual funds, like I said, are good long-term investment options; managers of these funds basically pick stocks that will deliver long-term gain from share price appreciation and dividend income growth.

On a lookout for other lower risk short term opportunities, I discovered the three emerging high yield and secured investment providers no one is actually talking about, while these investments are still new in Nigeria, some smart businesses entrepreneurs like us are already cashout from the model. It is a lending business opportunity.

You are aware of loan lending platforms in Nigeria like Pay later, C24, Kia-Kia, etc. These guys are taking advantage of the personal finance loan business gap banks couldn’t fill to generate billions of naira.

Let’s take a look at a personal loan lending platform and how much they charge as interest when you request for loan:

Best Investment Opportunities In Nigeria

This snapshot above is the interest repayment of N115, 028.69 payable monthly on N620,000 loan request with 7 months tenor. You can see the total amount payable at maturity, N805, 200.83 which is equivalent to 29.8% interest return to the lender.

Isn’t this outrageous? Now, imagine the number of users who request for a loan every day!

My dear, this is what banks make on you when you keep your cash in a savings deposit account for 7 months and in return pay you 1.75% interest (3% x 7/12 months).

These lenders, because they may not have enough capital to finance growing loan request, resort to borrowing more cash from individuals or corporate organisations with a promised return of up to 20 – 39%. The financial opportunities here is to plug in as a registered lender who gives to this registered and CBN-regulated credit company and earn a higher return than the rate on fixed deposit and treasury bills investments.

Click here to Download and Gain Access to all Untapped High-Yield Fixed Deposit Providers in Nigeria & Earn Up to 20-39%

Best Investment Opportunities In Nigeria With Low Risk and High Return

The potential of fixed deposit investment opportunities is no longer held by banks again but personal finance and SME loan lenders who are able to charge higher interest on a quick personal loan to salary earners or business owners to finance short-term needs. The companies have perfected borrowers’ credit and background checks to the extent that they only approve loan whose default ratio is less than 0.5%.  To encourage quick payback, they initiated a model that compensates borrowers who pay on/before maturity with higher loan disbursement, such that if they meet up to their current obligations, they can request for more loan.

Here are the 3 credit providers you can invest in:

Option 1

This is a licensed microfinance bank that offers consumer finance banking services. They started as a credit company before they got approval from the CBN to carry out microfinance operation.

As a lender on their platform, you can enjoy a higher return of up to 22% per annum depending on your capital.  Here is a table showing your deposit sizes, duration and percentage return.

Best Investment Opportunities In Nigeria

This micro-credit company requires an online registration of potential lenders and verification of identities using BVN and government-issued ID card before approval and if you are successful, you would be required to deposit into their corporate account, once payment is confirmed, you will receive an investment certificate showing the amount invested, maturity date, tenor, rate, WHT and full value.

Here is a typical return on N400,000 invested I invested in this company for 360 days:

best investment opportunities nigeria

Please note the following:

  • The interest on this investment is subject to 10% Withholding Tax (WHT).
  • The investment and the accrued interest will be rolled over at the prevailing money market rate if we do not receive instruction from you on or before the maturity.
  • The terms and conditions as contained in the Fixed Deposit Account Opening Form are hereby incorporated by reference with the same force and effect as though fully set forth herein, which terms and conditions may be changed by the company at any time without prior notice.
  • The terms and conditions contained in the Fixed Deposit Account Opening Form can be accessed via Terms and conditions
  • Where you request to withdraw funds prior to the maturity date, the may, in its absolute discretion, approve/reject a request for early withdrawal. Where such early withdrawal is approved by the company, a penalty charge of 50% of the accrued interest will be applied.

Option 2 (Exclusive)

This lender offers a better and higher return of 26-39% per annum compared to one mentioned above. The attractive feature of this investment option is that your interest rate is not dependent on deposit size of N20,000, besides, all loan disbursed are insured which means that if borrowers defaults, there is a chance of recouping your cash back.

Best Investment Opportunities In Nigeria

This is how this option works:

  • Browse loans to creditworthy borrows who have passed all18 different credit check and loan criteria.
  • Lend to borrowers at a higher rate.
  • Earn monthly return; direct deposit to your bank account.
  • Pay 1.5% of your return as operation fee.

Options 3 (Exclusive)

This provider has disbursed over N20 billion to 400,000 salary earners in Nigeria.

This is a sample advert from this credit company on BusinessDay Newspaper, one of the most respected business and investment dailies in Nigeria.

Best Investment Opportunities In Nigeria

As I said, these three platforms are registere and regulated by the Central Bank of Nigeria, so you are assured of capital protection and returns on maturity.

When I discovered these platforms, I don’t even bother about investing in my bank’s fixed deposit offer of 6-9% per annum when I can earn a solid low-risk return of 20-39% per annum.

Would you still invest in your bank’s fixed deposit? I guess it’s a capital NO, then, Click here to Download and Gain Instant Access to the Contact of these Untapped High-Yield Fixed Deposit Providers in Nigeria and Earn Up to 20-39% Per Annum

Contact: You can contact me for inquiries and questions on 08084219399. These providers are CBN regulated and NDIC insured.

How To Make Money In Stock Market Without Trading Stocks Yourself

How To Make Money From Nigerian Stock Exchange Without Trading Shares Yourself – Let Professional Mutual Funds Pick Top Performing Stocks, Invest for You While Your Get Returns.

After the 2008 global market crash that led to massive stock sell-off, sending the NSE index to an all-time low, interest in the Nigerian stock exchange market seems to be gathering momentum again. The equities market posted one of the best impressive performance of 42% in 2017; thanks to the reversed bullish trend in the oil market and innovative investors’ and exporters’ window introduced by the CBN to help make forex available at a market-determined rate without intervention.

This return which was far better than -16.1%, -17.4% and -6.2% in 2014, 2015 and 2016 respectively, was driven by Dangote Sugar Refinery (227%), International Breweries (195%), and Fidelity bank (193%). Other notable stocks that contributed to this positive close were Fidson, Stanbic IBTC, First Bank, UBA, NASCON and Nestle.

Since this news broke out early this year, I have been receiving several emails from my blog visitors and messages from retail traders on the best stocks to buy.  The interesting discoveries in these messages emails were that these senders weren’t experienced in stock market trading; no prior knowledge of the stock market investment or technical analysis of stocks, yet, they just wanted a simple and low-risk guide to taking their share of the potential wealth-creating opportunities in the stock market.

This is not even a local trend, foreign investors have are also keying into the trend.

Investors’ participation, at both local and foreign level, in the NSE market is now higher than it was last year.  While foreign portfolio investment is up by 59% to N132bn (against N82bn in February 2017), local investors have expanded their money flows by 51.48% to N140bn (against N128bn) (Source).

This actually shows that local investors invested more money than foreign investors.

How To Make Money From Nigerian Stock Exchange

This is a summary of the transaction flows from foreign and local investors. You will notice the spike from N83.22bn to N132bn; a lot of hot money is currently flowing to the financial market right now. Besides, as of 2018 YTD, local investors currently hold 56.56% of the market transaction while 43.44% is from foreign investors.

What did you see from this analysis? interest in the local stock market is at all-time high right now but what percentage of this traders are experienced and professionals traders? I can confidently say that only a few are actually making the real money.

As a smart beginner who isn’t a genius in the stock market but would like to invest in stocks, here is what you should do: instead of using trial and errors to pick stocks and lose money, isn’t it smarter to look for professionals that have a track record of positive returns in the stock market.

A brief look at mutual funds and their performance:

Mutual funds are professionally managed investment funds that pool money from investors to buy securities. While some funds are sector-focused, others are diversified. Your focus here is to look at equity funds; mutual funds that invested in listed securities for medium to long-term capital appreciation.

In Nigeria, we have a lot of professionally managed mutual funds that are creating more wealth for their retail clients. Why not find one,  let them manage your money for you while you focus on other businesses?

Let’s take a look at some mutual funds and their performance in 2017:

How To Make Money From Nigerian Stock Exchange

In percentage terms, FCMB Legacy Equity Fund topped the list to post the best return of 52%, followed by ARM Aggressive Growth Fund (46%) and FBN Nigeria Smart Beta Equity Fund (45%). While the past performance isn’t a key determinant of the future trend, it still serves as a guide to selecting the fund to select.

Here is my guide, I love equity funds not only posted positive return (above inflation figure of 14%) but also beats the NSE  market index.

As of this writing, we had just concluded the first quarter of 2018, let’s look at the top mutual funds that are posting market-beating returns above NSE index of 7%:

  • Meristem Equity Mutual Fund – This fund, owned by Meristem securities, focus on high-quality equities securities for long-term capital gain. Meristem Equity Fund created more wealth by 41% in 2017 and as at the end of Q1, 2018, it is already up by 17%.
    • If you had invested N1m in January 2018, in 3 months, you would have added N170,000 ( which is far better than fixed deposits or treasury bill).
  • Stanbic IBTC Aggressive Fund – When I contacted Stanbic IBTC to know more about this fund, they said, it’s targeted at high-class investors who can invest a minimum of N20m. While 60% of the fund is invested in equities, 40% is in fixed income market. Stanbic IBTC Aggressive fund posted 41% return in 2017. So far, the fund is up by 12.58% in Q1, 2018
    • If you had invested N1m in January 2018, in 3 months, you would have added a gain of N125, 800 to your investment.
  • Frontier Fund – This fund’s primary objective is to build long-term wealth for its clients by investing in carefully selected equities and money market securities. The fund gained 22% in 2017 but has now moved up to the ladder to be among the top 3 in the first quarter, up by 10.55%.
    • If you had invested N1m, you should have added N105,500 to your mutual fund portfolio in 3 months.
  • UBA Equity Fund – This fund is suitable for investors with a long-term outlook. It uses an internally generated fact-sheet to pick stocks that will deliver a long-term capital gain. The fund grew her client’s wealth by 41% in 2017 and also already up by 10.45% in Q1, 2018.
    • If you had invested N1m, your investment, at the end of March 2018, would have increased by N104,500.

While these aren’t a mutual recommendation, I shared this investing guide to let you know that,  even if you don’t know how to pick stocks, there are still alternative wealth-creation opportunities you can explore in the Nigerian stock market.

So, when you think of how to make money from Nigerian stock exchange market without spending hours analysing stocks or reading financial statements, go find a professional equity mutual funds that have good track records.

How I Compare & Trade Nigerian Banking Stocks

How I Compare & Trade Nigerian Banking Stocks Online – Learn How to Analyse Nigerian Stocks, Do Financial Ratio Analysis & Pick The Best Stocks To Buy.

Nigerian banking stocks are one of the most sensitive and volatile sector stocks to trade in the stock market; a fact that is not far from the strict regulatory presence of the CBN.  Well! It shouldn’t be a surprise to you; your money is held in banks and if there is no effective regulation governing the management, safety and investment of these deposits, public confidence in the financial system will definitely be lost.

Let’s look at the business model of banks and how investors should approach stock selections in the sector. How do banks generate and make money? This is the first question every investor, looking for a profitable bank to buy shares, should ask. You don’t just rush into a bank because they declared a profit after tax of N200b, probe their profit drivers, analyse the trend and understand the prospect of sustaining such performance.

I have already discussed in depth, the practical process of analyzing banking stocks here, go check it.

For the purpose of comparing two banking stocks and understanding stock selection, I will share a summarized and quicker approach to know which stocks to buy using Zenith and GTBank Q1, 2018 report.  Both banks, rank as top performing and most profitable banks, had just released their first quarter result as of this writing.

Now, let’s compare GTB and Zenith bank:

Who generates cheaper money more?

Banks generate money by accepting deposit from customers or issuing debt securities like commercial paper, Eurobond, etc.  While deposit comes with cheaper interest expenses, debt securities are subject to market risk and if it’s a foreign debt, exchange rate becomes an indicator to watch closely.

To answer these questions, I will be using their Q1, 2018 result to compare customer’s deposit and deposit/liabilities ratio to check which of the banks generates cheaper money than the other.

From GTB’s Q1 2018, the total customers’ deposit grew by 7.4% to N2.2tr against N2tr (in 2017) while Zenith bank’s customers’ deposit in the same period fell to N3.3tr (from N3.4 in 2017), that’s like 2.9% decline.

Lest I forget, Zenith bank has overtaken First Bank as to become the largest bank by customers’ deposit.

 

On deposit/liability ratio, I like to know which of these banks generate cheap money in percentage terms than the other. A higher deposit ratio means that more money flows at a lower cost (interest) while a lower ratio means the bank would have to issue more debt securities to fund loan and advances.

GTB has N2.2tr customers’ deposit and total liabilities of N2.9tr as at the end of Q1, 2018, representing 75.8% (a rise from 74% in Q1, 2017). Zenith bank’s ratio has 67.3% (N3.3tr in customers’ deposit and N4.9tr in total liabilities) against 71%.

From this analysis, GTB generates cheaper money in percentage terms.

Which bank is growing its core earnings?

A bank can use the money generated from customers’ deposit or debt issue to make more money by advancing it to retail and/or corporate customers or invest in the financial market. While the former comes with the risk of default which could lead to an impairment charge, investing in the financial market isn’t devoid of market risk. As of this writing, the yield on bond, treasury bills is currently on a free fall as the federal government reduces her exposure to domestic debt by issuing more foreign currency denominated bond at a lower interest rate.  This alone is a big threat to the profitability of banks that were holding back on loan and advances.

When comparing the performance of two banks for a better decision, I love to look their core earning: interest income from loan and advances or investment securities. Non-interest income is also important but when a higher percentage of banks’ earnings isn’t tied to its interest income, watch out for that red flag.

For GTB,  interest income fell by 4%,  from N84b to N80b driven major by the decline in interest on loan and advances to customers. As you would expect, this affected the net interest income as it fell to N59.6bn, from N66.1bn.  Impairment charge reduced significantly by 52%, from N3.4bn to N1.8bn; the bank is lowering her cost of risk but the introduction of IFRS 9 is another factor they have to grapple with.

Also, Interest expenses rose significantly to N17bn ( from N13bn in Q1, 2017). From all indication, the bank seems to have financed its deposit more by 30% than it did in the previous quarter.

Zenith bank, in the similar quarter,  grew its interest income by 20.3%. In figures, interest income stood at N142.6bn against N118bn while net interest income after impairment charge increased to N91.3, from N62.7. Just like it peer, the bank would have to find a way to deal with the challenge of IFRS 9 as its wind-down its bad loans (impairment charge) by 42% (from N7.9bn to N4.5bn).

As the future outlook reveals the end of free money from fixed income securities, I expect these banks to cautiously increase their loan and advances to customers but not without due diligence to avoid unprecedented spike in non-performing loans.

Having looked at the interest income, the next line of comparison is to look at their net interest margin, a measure of the ability of banks to earn from existing assets, cost of risk, profit after tax and EPS. All these have been simplified on my post on “How to analyse banking stocks“. I only shared this to help you understand the process of comparing and trading Nigerian banking stocks easily.

If you are looking for reliable website where you can find all market and financial data to analyze Nigerian stocks, get a copy of my book here.

Best Online StockBroker For Non-US Residents or Foreigners

Best Stockbroker for non-US residents, foreigners or international investors you can open a global stock trading account, pick profitable top gaining stocks on Nasdaq, AMEX and NYSE

If you are a non-US resident looking for tips on opening a low-cost stock brokerage account in the US so you can easily trade shares of listed companies from the comfort of your home, or office, this investing guide contains my experience and how I gained access to the world’s largest and most liquid stock exchange platform.

Yes! the US stock market remains the most attractive financial trading platform in the world; not only is it because it has the highest number of listed companies of any market size from different countries but also offers you the easiest route to tap into the numerous wealth creation opportunities in the US market; technology, healthcare, real estate, finance, construction, etc

When you gain access to the US stock market, you have an unlimited opportunity to trade the finest, fast-growing and most valuable companies in different stock exchanges like NYSE, AMEX, Nasdaq & OTCs.

During my search, I realised that the real challenge typical non-US residents or international investors face wasn’t the availability of US brokers but finding the regulated and trusted stockbrokers that accept retail investors with little capital. Some even, accept and reject applications from selected regions due to international regulatory policies.

My first encounter with a US stockbroker wasn’t even appealing: I met all their minimum account opening requirements but couldn’t move ahead because their initial deposit as t then was $500 ( at an exchange rate of N360, you need N180,000), by the time you factor additional commission on trade, miscellaneous fees, e-tax statement, and so on, I guess you properly would re-direct your search.

Update:  Sogotrade broker no longer accepts Nigerians.

Best Stockbroker for non-US residents, foreigners or international investors & basic requirements:

To summarize this guide, here are the basic requirements you need to make available before opening a US stock brokerage account as a non-US resident or international investor.

  • Government issues ID ( National ID, International Passport, Drivers’ License) for personal identification.
  • Utility bill (PHCN for almost 3 months ) or bank statement showing your physical address. The address on your document must correspond with the address to fill online.
  • Go to ChoiceTrade.com, my preferred and recommended regulated low-cost stockbroker for non-US retail investors.

ChoiceTrade is the leading stockbroking firm in the US, the platform offers the cheapest transactions fee compared to other US Stockbrokers like ETrade, TDAmeritrFidelityleity, and Schwab.

While other Stockbrokers require a minimum initial account funding of $2,000, $5,000 and $10,000, ChoiceTrade is pegged at $100.

Best stockbroker for non-US residents

Before you register on this platform, you need to cross-check your documents and make sure the information you provide during registration (personal profile, investment records, etc) corresponds with the details on the documents submitted. Any discrepancy may lead to termination of your account.

After filling the forms you will be required to scan and send your government ID and utility bill for review.  For registrations submitted during business days, you will receive a response on the status of your applications and if approved, a welcome email will be sent to you with your ChoiceTrade account number and login details.

How to fund your ChoiceTrade account:

ChoiceTrade offers various funding options but I recommend “bank wiring” via international transfers from your local bank: it’s faster and safer except that the rising cost of international transfers from certain countries.

The last time I wired fund from my local bank in Nigeria to ChoiceTrade, the total fund sent was $50 + the amount funded.

Here is a recent update on ChoiceTrade website:

IMPORTANT NOTE: In order to fund your account with a wire transfer, you must have a bank statement on file with ChoiceTrade from the bank and account where the wire transfer will originate. Your name and address on the bank statement must match the name and address on your Choicetrade account. Please do not initiate a wire transfer unless you have provided us with a correct bank statement. If the bank information does not match the wire transfer when it is received, your wire will be returned. No exceptions will be made to this requirement. 

To fund your account, submit these details to your bank:

WIRE INSTRUCTIONS:
Bank Name: BMO Harris Bank, N.A.
Bank Address: 111 West Monroe St., Chicago, IL, 60603
ABA # of Bank: 071-000-288
SWIFT (foreign only): HATRUS44
Beneficiary Name: Electronic Transaction Clearing, Inc. Settlement Account
Beneficiary Address: 660 Figueroa Street, Suite 1450, Los Angeles, CA, 90017
Beneficiary Account: 2459865
For Further Credit To: Your Name / Your ChoiceTrade Account Number (Beginning with “01”)
NOTE: You must include your ChoiceTrade Account Number on the wire document, or your wire will be returned.

That’s all for now!

Update, ChoiceTrade no longer accepts Nigerians, Click here for a guide on how I still trade US stocks for profit.

How to Pick Great Nigerian Stocks To Buy Using Quarterly Result

How To Pick Great Nigerian Stocks To Buy Using Quarterly Result – Learn How To Spot Stocks That Will Rise Faster Than Its Peers And Trade For Profit.

A lot of investors make the mistake of using a company’s annual financial statement to analyse performance and possibly know whether the company’s equities is profitable to invest in or not.  For me, I feel it’s a complete waste of time; the annual report of a company isn’t the best tool you need to pick the best stocks to buy as a short-medium term trader, even though, it contains a summary of the financial performance, what you actually need is the quarterly results.

The quarterly result is an interim report that contains the profit or loss, statement of financial position and cash flow statement of a company in the last 3 months, it’s fresh and new; you can actually rely more on it to forecast the growth pattern of your potential stock. A company’s annual report, on the other hand, lets you analyse past performance in the last one year.

Do you really think that waiting for a whole year to pass before analysing the company you invested is the best strategy to be on top of your stock investing game? Not all, you to constantly monitor current trends as it happens real-time which is only available in the company’s quarterly result.  Besides, since, the aggregation of the four (4) quarterly results makes an annual report, isn’t it wiser to always track financial result on a quarter by quarter basis?

A company that will do well in a particular year would have posted series of impressive results on its quarterly statement. As a smart short-term trader, your focus should always be on how the company had performed in the latest quarter relative to the same comparable period in the previous year.

Key points to note:

  • When you analyze the first quarter result of a stock, make sure the previous annual results are better than the preceding year.
  • IWhen you analyze the second quarter result of a stock, make sure the first quarter result is better than the comparable quarter in the previous year (by at least 25%).
  • When you analyze the third quarter result, make sure the half-year result beats the company’s previous half-year result.

Why you should follow the quarterly result:

Take a look at the financial results of companies that performed well on a year-to-year basis in the Nigerian stock market, you will notice that before the massive jump in their share price, their quarterly sales,  and profit figures were already rising faster than expected. Stocks like Dangote Sugar, Nestle, Zenith, UBA, GTB, among other top stocks reported impressive double-digit growth in their quarterly report prior to the impressive run in 2017 and if you are to spot the same opportunity today, you must focus on companies that are growing by double-digit figures too.

In this guide, I will be sharing one stock that is currently showing a double-digit run so far and analyze the performance using their recent Q1, 2018 result.  The stock is Transcorp Nigeria Plc.

I have already discussed the annual performance of this stock, check it out here

Transcorp Plc Q1, 2018

  • Revenue for Q1, 2018 was N26.3 billion against N15.7 reported in Q1, 2017 (67% growth). The key drivers are room sales,  food and beverage, energy segment of the conglomerate.
  • Cost of sales ratio declined from 56% in Q1, 2017 to 54% in Q1, 2018 while gross profit margin increased from 43.9% to N45% in the same period.
  • Interest cover remains strong at 3.5 times (from 1.82) – the company can finance its interest expenses from operating profit.
  • Profit before tax rose by 242%; from N1.7bn to N5.9bn while profit after tax expanded significantly, up from N1.4bn to N5.4bn, representing 285%.
  • Net profit margin also from 8.9% to a double-digit figure of 20.5%
  • Transcorp plc EPS figure for Q1, 2018 is up by 510%, 5.5k vs 0.91k. The company reported a half-year EPS of 3.87k in 2017 which is less than Q1, 2018 figure. By the third quarter, Transcorp should surpass its 2017 full year EPS. No doubt, shareholders are in for a bumper harvest this year if the company maintains this growth level for the rest of the year.
  • Return on equity stands at 5.3%, against 1.4% in Q1, 2017 while debt to equity declined from 88.9% to 81.9% which implies that the company is reducing its debt and earning more with shareholders’ fund.
  • Although the liquidity position isn’t impressive, there seems to be a significant improvement compared to last quarter (Q1, 2017) and I hope the company finds a way to lower their short-term borrowings.
  • Transcorp PE ratio stands at 16X, an indicator that investors are currently betting on the future potential of the company. Can this stock meet up to expectation? Watch the EPS growth, Transcorp reported an EPS figure of 11.7k, which is 631% higher than the 2.2k loss in 2016. The current Q1, 2018 is 510% higher than Q1, 2017 EPS, and had already covered the half-year EPS in 2017.  Transcorp, no doubt, is fundamentally strong and can meet up considering the higher revenue figure from room/food and beverages as the company’s hotel in Abuja is believed to enjoy much patronage from top politicians as 2019 election draws near.
  • The stock is up by 10% YTD, still outperferming the NSE index.

When you compare quarterly result like this, I bet you, spotting great stocks won’t be a challenge again because you will quickly know which company is growing at a double-digit rate ( of at least 25%), a clear sign that dividend payout is sure and since investors love fast-growing dividend income stocks like this, it is natural for demand to drive the share price upward.

On a final note, do your homework, check out the quarterly results of stocks that were ranked top performers in 2017, you will notice that they posted double-digit growth in their 2 or 3 quarterly earnings before their share price moved up.

My rule of thumb is this:

  • Sales/Revenue should be up by at least 10-15% Q on Q.
  • The cost of sales/revenue should also be stable or in a fall.
  • Profit before and after tax should also be up by at least 15-20% on Q on Q.
  • EPS  should be up by at least 25% Q on Q to beat the previous years’ annual EPS.

I hope you found this guide useful?

Top Gaining Insurance Stocks To Watch This Week – 23nd April

The NSE All-Share Index and Market Capitalization depreciated by 0.28% to close the week at
40,814.89 and N14.743 trillion respectively.

Similarly, all other indices finished lower with the exception of NSE CG, NSE Premium, NSE-Main
Board, NSE 30, NSE Banking, NSE Oil/Gas, and NSE Pension indices, which appreciated by 1.08%,
1.38%, 0.54%, 0.13%, 2.34%, 0.73% and 1.42% respectively.

See – NSE weekly stock market report here

As usual, we select our top stocks to watch from a pool of stock that closed last week on a positive note. But, something is quite interesting about my pick this week; the two stocks, I am going to buy and hold for two weeks are insurance stocks.

Insurance like I shared in my post on how I analyse insurance stocks, is one of the financial products that are difficult to sell in Nigeria; the adoption of insurance policies in this part of the world is very low which is even evident in the sector’s contribution to GDP growth. However, this doesn’t mean you should avoid the big opportunities inherent in the sector; some companies are actually doing well. I shared the 3 key ratios to uncover top insurance stocks in that post and when you combine that with the potential of trading penny stocks, I still feel, insurance is a sector to look into but not without caution.

Let’s see the two insurance stocks on my radar:

Custodian And Allied Insurance Plc

The stock open at N4.9 to close at N5.09,  3.8% growth but here is why I picked the stock:

  • It is trading at an all-time high right now.
  • Investors’ sentiment is largely positive as the latest financial result looks good, no wonder the stock is up by 33.9% YTD, outperforming both insurance and NSE indices.
  • Technically,  the stock is trending up on the daily, weekly and monthly chart.

Top Gaining Insurance Stocks In Nigerian Stock Market

Advice:  Buy now and take profit at N5.34-N5.5.

NEM Insurance Plc

The stock gained 22k to close the week at N2.62, 9.17%. NEM is one of the most profitable insurance stocks to watch this year as the company’s result so far is impressive. I have already analyzed this stock extensively when I posted my guide on “how to trade insurance stocks“. You will recall that I ended my verdict on NEM stock as “overbought” when it traded at N2.7: there was a possible fall as investors were expected to profit.

Watch this chart closely:

Top Gaining Insurance Stocks In Nigerian Stock Market

In line with my forecast,  NEM actually fell from N3 to N2.64 (the yellow region).

Here is why and when I will buy NEM insurance:

  • The overall sentiment on this insurance stock is positive on the weekly and monthly chart but the daily chart isn’t fully bullish yet.
  • The latest financial result of NEM insurance is on point.
  • NEM insurance is up by 66.4% YTD, outperforming the insurance and NSE indices.

Verdict: Wait for the stock to show more bullish sign this week and buy at N2.8 with a target profit of N2.94-N3.08.

That’s all for now. I hope you will follow this two insurance stocks in the next two weeks to see how they performed.

Unilever First Quarter Result, 2018- Key Ratio Analysis

Unilever released its first quarter result for 2018.  see here

  • Revenue increased from N22.1bn to N25.8bn, representing 14% growth. The growth was driven by an increase in sales of the firms’ food and home care products.
  • The cost to sales ratio increased slightly to 72%, up from 71% in the corresponding period.
  • Gross profit margin also fell marginally to 27% (compared to 28% in Q1, 2017).
  • Interest coverage ratio expanded to 38.8, from 4.1 in Q1, 2017 – the company can comfortably cover its interest expenses from operating profit (EBIT).
  • Profit before tax and after tax grew by 85% and 75% respectively.
  • Net profit margin increased to 10.8%, from 7.2% reported in Q1, 2017
  • Return on equity increased to 3.5%, from 2.1% while debt to equity declined to 9.4%, from 11.2%.
  • EPS also increased from 28k to 50k, 78.5% growth.
  • As of this writing, Unilever is up by 31% YTD, outperforming the NSE index of 7%.

Zenith Bank First Quarter Financial Result: Key Ratio Analysis

Yesterday, GTBank released its first-quarter result for 2018 which showed its interest income dropped by 3.95% to N80.77bn (N84bn in 2017) and a slight increase in net income by 7.7% to N44.67bn up from N41bn reported in 2Q1, 017. This compares to the 50.6% growth in interest income recorded last year when the yield on TB surged to an all-time high of 22%.

The result isn’t a surprise as the federal government looks to cut domestic borrowing on the back of a lower cost on foreign borrowing, a decision that isn’t unconnected to the massive drop in interest on fixed income securities to less than 13%.

While this fall is expected to pose a great threat on bank’s profitability in 2018, Zenith bank is showing no sign of slowing down as the bank’s recent first quarter result, released today, showed impressive performance on key figures.

Here is a link to Zenith bank’s Q1, 2018 result.

Continue reading Zenith Bank First Quarter Financial Result: Key Ratio Analysis

How I Follow Latest Nigerian Stock Market News & Company Report

Latest Nigerian Stock Market News & Financial Report – Follow Recent Happenings in NSE Trading Market, Top Gainers & Losers and Quarterly Results of Stocks

Investing in the stock market is like a sowing a seed on a farmland, you need to consistently monitor your investment, track the growth and follow events that could affect your expected return. But, how do you cut through the noise, keep up with latest company/market updates? this is a question you can’t afford to ignore if you must protect your capital from possible loss arising from market sell-offs.

Successful stock market investors don’t just analyse and pick great growth stocks with upside potential but also have a system that lets them follow all the companies they have shares in to avoid being taken unawares. A few weeks ago, a good number investors sold their shares to take profit which dragged some of my profitable stocks to month-low, but because I follow these stocks and didn’t get any alert of fundamental news, I had to load more units as I felt reversal isn’t far again.

For instance, Investors in Japaul Oil are currently not happy as the price of the oil stock tanked to a lower level after it posted 2 weeks gain on the back of additional fund injection by Milost Global which eventually turned soar as the private equity firm battles with litigations in New York and authenticity of its business acquisition model. This, plus the negative shareholders’ fund on the company’s statement of financial position is a major factor the could affect investors’ perception about Japaul Oil Plc in short to medium term.

If you are a shareholder and have not been following this update on top business news websites, you may not know why Japaul share price is falling and such would think there is a hope of a reversal in short-term.

Continue reading How I Follow Latest Nigerian Stock Market News & Company Report

Best Financial Ratios to Compare & Analyze Retail Companies

Best Financial Ratios to Compare & Analyze Retail Companies in the Nigerian Stock Market – Learn the Most Important Ratio Investors Use to Pick Stocks.

Stock market investing isn’t a process of jumping at any company’s shares because you love the brand or are personally attached to the company’s chief executive or even have a relative working in such company but one that requires a careful analysis of the financial position of a company with the aim of ascertaining its future growth potential. This is generally done by looking at the company’s statement of income or profit or loss, understanding its strength via the statement of financial position and cash position on the statement of cash flow.

The truth about analysing a company’s financial strength is that you don’t have to be a financial guru, professional analysis or an experienced stockbroker, all you need to know and understand are few numbers that intuitively revealed the past performance and where the company is headed.

Personally, I work with few reliable financial ratios before taking investment decisions. In using these ratios, do not randomly pick a stock and then subject it to these ratios, go to the post, where I shared profitable strategies to selecting best-performing stocks to screen out top stocks in the strongest sectors.

One great reason you shouldn’t ignore financial ratios when investing is that when you have several stocks to buy, it helps you to easily compare and pick the best companies with attractive growth potentials.

I have already discussed the application of these financial ratios using Transcorp and Dangote financial statement as at 31st, Dec 2017, click here

Now, let’s talk about these financial ratios as it relates to growth, opportunities and share price forecast.

1. Growth

When analyzing or comparing two companies, the first major area to look at is how fast each of the stocks is growing. Here, I look at financial ratios like market share ratio, the cost to sales ratio, gross profit margin, interest coverage, and net profit margin.

Continue reading Best Financial Ratios to Compare & Analyze Retail Companies

How I Make Money Trading Penny Stocks in Nigeria Stock Market

Best Penny Stocks to Buy in Nigeria – Learn the Fundamental & Technical Analysis to Know How to Invest In Profitable Penny Stocks in Nigerian Stock Exchange.

Penny stocks in the Nigerian stock exchange market are small equities with relatively lower prices ranging from 50k to N5, they are small-cap stocks investors can make money on, via share price appreciation.

Local and foreign equities investors are showing growing interest in penny stocks because of their lower prices. Besides, 80% of emails and SMS I receive from newbies interested in stock market investment revolves around penny stock recommendations and the reason isn’t far from the fact that they can buy more units even with little money.

While some investors are buying in anticipation of improvements in their status and future potentials, others might be buying these stocks for the quick return it offers, say 1, 3 to 6months.

Penny stocks, when compared with big-cap or well-capitalised, offer the potential of earning greater returns on investment in terms of share price appreciation. For example, it is easier for an 86k stock to rise to N1.6 or gain 100 per cent in price appreciation in weeks than a big cap stock like SEPLAT trading at a price of N590 to double to N1,080.

Continue reading How I Make Money Trading Penny Stocks in Nigeria Stock Market

Top Gaining Stocks to Watch This Week, 3rd April

The NSE All-Share Index and Market Capitalization appreciated by 0.08% to close the week at 41,504.51 and N14.993 trillion respectively.
Similarly, all other indices finished lower during the week with the exception of the NSE Premium, NSE Consumer Goods, NSE Lotus II and NSE Pension Indices that appreciated by 1.15%, 1.73% 1.58% and 0.34% respectively

On a weekly basis, we pick top stocks to watch from the list of previous week gainers, these are stocks we think will continue their upward move following week.

Wema Bank

The banking stock gained 24k to close at 99k (from a market opening of 75k), that’s like 32%. Technically, the stock is looking good and set to continue its move as all indicators, on daily, weekly and monthly chart, signals a buy entry.

Caverton Offshore Support

The oil stock gained 18k to close at N2.67 (from a market opening of N2.49), that’s like 7.23%. Technically, the stock has just broken a trend channel to the upside.

Continue reading Top Gaining Stocks to Watch This Week, 3rd April