Oge
Early January, I mentioned three (3) stocks you can bank on to earn double-digit returns before the end of the year (see here) – they were Honeywell, Nestle and Nascon. It’s obvious that these are companies that fall under the consumer goods sector which is represented by NGX CG Index.
Why did I pick these stocks?
Aside from the bullish setup that points to a steady uptrend in their share prices, I was so confident that an increase in food prices would be a huge driver, we eat every day, we buy foodstuffs and aren’t giving up on food anytime soon, so the rising prices wouldn’t stop us from spending on food.
And what’s the result today? Honeywell stock price has moved from N1.2 to reach a high of N1.7, that’s 41%, Nascon has moved from N14.5 to N15.75, up by 8.6% and Nestle is already up by 2.3%, from N1,505 to N1,540. If you had invested in these picks, your portfolio should be up by 17.3% on average compared to the latest inflation rate of 17.93% (as of June 2021). This is just a 63 basis point away from the benchmark rate.
But this is the same market where the NSE index is down by 6-7% on a year to date, so there is no doubt that the few guys that keyed into these picks have done well so far.
Do you still think these stocks have some upside potentials to actually beat the inflation rate of 17.9% in the coming months?
Let’s look at Honeywell stock, this is a consumer good stock that may still attract positive sentiment for the rest of the year. The company recently hit its N100 billion revenue mark, the highest in its 23-year history after posting profit growth of 73.1% to N1.13billion in the full year 2020.
Nascon followed the same growth path with a 21.24% increase in turnover to N8.3 billion and a 15.2% increase in profit to N723 million.
Nestle Nigeria, a foremost consumer goods stock with the highest product line, didn’t fall short of my growth expectations in its latest quarterly result. The company grew its earnings to N12.4 billion, up by 11%, supported by a 26% and 24% increase in food and beverage sales respectively.
The impact of rising food prices for the rest of the year will continue to drive topline figures to the moon.
Nestle just hit a 52-weeks high of N1, 540…
The stock ended last week on a positive note with 10% appreciation. In the last 1 year, Nestle stock has gained over 100%, from a low of N765 to today’s closing price of N1, 540.
What could have been responsible for this new height? The optimism around improving fundamentals supported by higher food and beverage prices across its product lines. Besides the company’s trailing twelve-month earnings is currently N50.99 compared to N49.47, which is a clear sign that Nestle is on track to beat its financial year’s result.
All these already points to a stock that is headed to the upper Bollinger band of N1, 700 – N1,806, 12.9% upside, my earlier forecast at the beginning of this year.
What I just shared is a confirmed proof that you can beat inflation year on year and generate good returns if you understand the ropes of stock trading without gambling.
Do you own any of these stocks?
Is your portfolio outperforming the inflation rate this year?
I’d love to read your feedback and comments.
