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2 Top Value Stocks I’ll Not Sell But Buy More Units this February 2020

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If there is one investing tip I have learned in my years of buying and selling stocks, it’s this: let your winning stocks run and cut the losers. While profit-taking, uncertainties and government policies often cause the stock market to correct, I think it’s a test on our resolve to stick to the stocks we pick, the fact is that good and high-quality stocks will always increase in value over time, hence make investors money if they’re patient.

As for me, of the 6 stocks I hold in my portfolio, there are two that I have absolutely no intention of ever selling this month but will keep buying more because I think they are ripe for appreciation after heavy correction.

Access Bank

One simple way to multiply your money in the stock is to take advantage of the huge price swings; you don’t have to hold a stock for months or years when you can sell for profit, wait for a correction and re-enter at a lower price. This is the summary of my strategy on Access bank’ stock. I keyed into the stock last year (N6.9-N7.2), sold at N10.5 which was 45% ROI, then bought again after a major correction to N9.3, exited at N12 (via a pending order ahead of another correction), 29% return on my investment. That’s like 87% compound return on my initial investment.

You will agree that this strategy tends to reward smarter investors more than risk-averse who had held the stock at N7.2 to today’s market close at N9.8, 26%.

This strategy works for traders that use the daily chart to spot swing trading opportunities amidst a confirmed bullish run.

Here is a screenshot of how Access bank stock had reacted to MACD crossover on the daily chart with another emerging cross to watch. With a successive bullish close in the last 3 days after a 23% correction from N11.95, I think Access bank’s stock is set to appreciate again.

The bank has delivered impressive double-digit growth on both top and bottom-line figures in the last 3 quarters and as investors await its Q4 2019 result, it makes sense to grab a share of this bank at N9.8, today’s close or less for 20-25% return (exit at N11.7-N12).

Flourmill Nigeria Plc

This stock is one of my favourite non-banking stocks. I recommended Flourmill in January but asked my blog readers to wait for a major correction as it was overbought then (N23). In line with my forecast, the stock shed some value to close at N19-N20 but quickly recovered to N22.8.

With the impressive growth recorded in Q3 volume and profit, the stock is a good buy right now.

flourmill stock

The chart above highlights the bullish potential of Flourmill using the MACD indicator. Going by historical price performance, the stock has appreciated by 22% on average in the last two (2) crossovers and I think an emerging MACD cross and recent Q3 supports my call to top up this stock at N22.8 or less.

Disclaimer: The information shared here is my personal opinion, you are advised to do your due diligence.

Why Flour Mills Should Be Your Next Stocks to Buy

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It is a new year, a new decade and a new chance to add more figures to your portfolio. While the current stock in your portfolio won’t keep its bullish run forever, you should be concerned about the next best stock to watch when it’s time to take profit.

Now you may ask, what stock should I buy to maintain the positive trend on my portfolio in 2020?

After screening for stocks using MACD, here is one non-banking stock you must key into when the price falls.

Flour Mill Nigeria Plc

You might think that the 53% appreciation in the share price of Flour Mills in the last 3 months means the stock is already overbought, this isn’t the case here, Flour Mill still has a great upside potential to N34-N35 which is like 47% growth from today’s close – N23.

Let’s look at the fundamentals of the consumer goods stock:

  • First Quarter – The company recorded a volume growth of 7% and an improvement in profit before tax to N5.5b (which is 6% higher than the figure posted in the previous comparable period). The group’s PAT increased by 17% to N4.2b against N3.6b in 2018.
    • Flour Mill management’s strategy to cut down massive exposure to debt also paid off as finance cost dropped significantly to N4.5b (from N6.2b)
  • Second Quarter – The company also recorded marginal growth in volume – 6% – while the profit before and after-tax print at N8.6b and N5.9b respectively. The former increased by 4% while the latter was 16%.
    • The finance cost in the same period went down by a whopping 21% to  N8,8b (from N11.2b). The management continued deleveraging strategy and lower interest rates helped lower this line item and I think, this a major driver of bottom-line going forward, except the CBN reverse its policies on OMO auction.
  • A combination of border closure which is believed to support the increasing demand for Pasta and Noodles should help drive Flour Mill  Q3 result.
  • I expect the company’s full-year PBT and PAT to expand by 18-19% which is quite impressive amidst a challenging operating environment.

While all these make Flour Mill Nigeria attractive, should one buy now and what is the upside potential? 

To answer this, let’s use the MACD ( that helped me spot Access bank at 7.2, and Jaiz bank at 42k before they appreciated by 50%+ ) to analyse the stock and know where it is right now.

Here is the chart of Flour Mill Nigeria Plc: 

From the chart, you will see how a crossover to the downside (A to B) precede a sharp sell-off that led 66% loss. As we know. stocks won’t go down forever, there is always a bottom – marked from B to C, the stock appreciated by more than 100% before another bearish crossover occurred, Flour Mill lost 62% of its value.

With a 53% appreciation in the last 3 months, we have a fresh bullish crossover supported by a rising relative strength index of 52, what does this mean? Flour Mill Nigeria stock could appreciate to N34-N35 which  N3 below its 2018 high of N38. As of today’s market close, the stock sells for N23.

What is the best entry price?

The stock looks overbought on the weekly chart, wait for a reversal and average down from N20, then exit at N34-N35.

3 Reasons You Shouldn’t Ignore Stocks in 2020 and Beyond

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The stock market has had its share of the ups and downs in the last 20-30 years but one interesting about the market after several global market crashes is that its benefits haven’t changed – what people refer to as a change is in their personal perception of the stock market – they always associate it with bigger risks and lower return.

In Nigeria, the perception is even at its lowest level – after 2008 crash – with some writing off the stock market from their investment options. Well! I am here to help rebuild that confidence again by sharing some of the powerful reasons you should consider the stock market again and spice your portfolio up with foreign equities which have proven to generate more returns (in price appreciation and exchange rate) than our local market.

Besides, when you consider the returns on 365-day Treasury Bills – 6% or less, bank fixed deposit, 4% – which aren’t even anywhere close to inflationary rate expectations in 2020 (12%), you would agree with me that the stock market isn’t just an option again but a must place to consider for higher returns.

Yes! The Nigeria stock market lost about 16% of its value in 2019 which is its worst in 3 decades but this doesn’t invalidate the limitless opportunities in the stock market – our economy is fragile, no clear policy direction and uncertainties – in the last 12 months, we have witnessed several policy announcements that are geared towards protecting local businesses and currency from devaluation.

Did you also know that in this same period, the Standard and Poor 500 index and Dow Jones Index surged by 29% and 23.76%, its best return since 2013? That means the stock market performance is largely dependent on investors’ perception about the strength of listed companies – If more listed stocks are perceived to offer more value in terms of price appreciation, then it is normal for the index to go up and if more stocks are perceived to be hit by slow economic growth, and policy uncertainties, then the index would shed value, just like we have seen in the NSE index.

The following are timeless reasons you should invest in the stock market:

Invest in Stocks Because Money Sitting in Savings/Fixed  Account Will Lose Its Value:

When you are saving for a major project or future plan, you need to settle this hard truth – Inflation isn’t and will never be your friend. So, if you have been saving up some cash in the bank, start thinking about how inflation is already eating the purchasing power of money that is sitting in a 1-2% savings account. It would have to earn you at least 12-13% per annum to keep up with the inflation and unfortunately, there is no high yield savings account that offers such rates.

Even if you find a fixed deposit that earns a higher rate of return that surpass the historical inflation rate, your money is only tied up for the terms of the deposit which may range from 30 days to 365 days – in case you need to withdraw your money before the term ends, you will be subjected to an early withdrawal policy which will further erode your earnings.

Invest in Stocks Because They’re Easy to Invest In and Highly Liquid

If you are a new investor with a few Naira to spare, you can get started in the stock market in less than 24 hours without complex paperwork – besides, stock market investing doesn’t require millions of Naira, you can set aside the money you would normally spend and invest it on a monthly totals in your selected stock.

You need to be sure of the company you want to invest in, and if you are just starting, I have created a forum to help you connect and share investing ideas with investors like you.

Another good thing about stock is that, when you compare buying stocks to buying real estate, stocks are faster, easier and cheaper to trade where real estate requires more documentation, consultations and due diligence.

Stocks are more liquid – you can quickly turn your stocks into cash

Let’s say you had N1,000,000 invested in the stock market and you wanted to get all your money out right away, you will most likely turn the million Naira into cash and get it credited into your account. This is different from real estate which may take time and money to your asset into cash.

Invest in Stocks for Diversification and High Returns

Buying stocks allows you to diversify your portfolio and how you make more money for yourself and family – it is a known fact that the more ways you know how to make more money, the less you are at risk of getting into financial trouble.

Let’s also say you have a full-time job that pays you a salary and are looking for another source of income that wouldn’t conflict with your day job, would you still buy Treasury bill that offers 5-6% at the end of a year when you can diversify into stocks?

The summary of these reasons is that the state of the Nigeria stock market doesn’t reflect the full benefits of the stock market – A well regulated and organized stock market like the US stock exchange offers enormous wealth-generating potential. So, if you are still battling with the 2008 crisis that wiped billions of Naira out of the market, this is a new year, get new knowledge, join our investing community, engage the service of a mentor who will hold you by hand, lets you copy his portfolio while learning the ropes of stock market investing. (You can reach me for a paid mentoring program – 08084219399)

The stock market remains the best place to use the money you already have to make more money.

Want to Earn Big Profits from Nigeria Stock Market? Try this Secret

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make money from nigeria stock market

This strategy highlights another way you can still make money from Nigeria stock market.

One of the biggest challenges of a beginner in the stock market is “how to pick the first stock and become profitable“. I receive related questions like this from beginners and amateur traders who are finding it extremely hard to select good stocks with upside potential.

Today, I will be exposing you to a big money-making system – you can adopt in the new year and beyond – that can add more figures to your current portfolio, no complex financial ratio analysis – you only need to wait for earning seasons every three months, do a quick market scan and pick a few stocks that are gaining momentum on big volume.

The idea is what I call Turnaround stocks – these are companies that have fallen out of favour, stumbled badly, whether because of bad management decision or outside events but are staging a bigger comeback and trade at a cheaper price than their projected earnings. Another way to look at turnaround stocks is their previous financial performance; they have been reporting losses in previous quarters but had justed released impressive results in their latest quarter, hence changing investors sentiments and expectations, sometimes you would see analyst upgrade their ratings from sell to buy.

In spotting stocks like this, due diligence is highly required as some companies that were believed to be on track to profitability could fall back to their previous loss position. With this in mind, I always probe the reason a company had just declared a profit and if such could be a one time proceed from asset sales or a result of a strategic move that will continue to impact future earnings.

A solid reason you should embrace this stock investing strategy is that the returns could be big for investors who choose well – Some investors have made 50%, 100%……250% or more from such stock.

Some of the turnaround stocks we’ve had in the past were Cadbury, and UACN – These stocks lost their momentum as a result of weak financial performance but eventually turned around after a major restructuring. From this scenario, we can deduce that most turnaround starts with board restructuring, new management decision, then government policies or economic events.

How can one spot good turnaround stocks?

Like I said earlier, you can either keep track of stocks investors are dumping until they bottom out or have a system that alerts you immediately a stock shows a sign of reversal. While the first option can be tedious as no one knows when a reversal is in sight, the second option employs stock screener to scan for companies that have declared their first quarterly profit after a series of previous losses.

To help us find potential turnaround stocks, we will pick four (4) criteria:

  • EPS (FY) – We want to see Earnings Per Share in the Previous Year to be less than 0. This automatically displays all the companies that reported a loss in their 12 months period.
  • EPS (TTM) – We also want to see Earnings Per Share for last four (4) quarters in the negative territory (less than 0); this means that the companies are not posting profits for at least the previous four quarters.
  • EPS (MRQ) – This is where the turning point starts; EPS (MRQ) implies Earnings Per Share in the most recent quarter. We want to screen for companies that had just reported their first quarterly profit. This may vary; some might have held an impressive run with history of quarterly profit, but for whatever reason (economic events or policies) fell into the negative territory and now seeing their first profit or it could the company’s first profit since inception.

The EPS (MRQ) should be above 0.1 – a quarterly profit tells you that the company is on its way to a full year’s profit.

The final search criterion is to look at the monthly performance.

  • Monthly Performance – This is optional but to an extent it lets you measure investors sentiment towards the companies because such could validate your assumptions. The idea is straight forward; if the next quarterly result is expected to be impressive, there is a solid chance the share price should increase after earning announcement and will continue to surge higher in coming months.

When I applied this screener to our local stock market, the result showed two stocks:

  • Cornerstone Insurance – The stock declared a loss of 23kobo in 2018 financial year. Right now, its loss per share in the previous four quarters is 4k while its recent quarterly result indicates a profit of 16kobo. The stock is up by 129.63% and 16.98% in the last 3 and 1 month respectively.
  • Royal Exchange Insurance – This insurance provider just declared an impressive quarterly result of 11kobo per share which is far high than its previous full year’s loss per share of 3kobo and trailing 12 months loss of 7kobo. With a share price of 28.57% and 35% in 1 and 3-months period, Royal Exchange plc is no doubt another example of turnaround stocks to watch.

In trading turnaround stocks, it is best to buy earlier than the big volume traders or else, you might end up buying at the top of the roof. Technical analysis of price is highly required to avoid buying high and selling low.

Why Royal Exchange Stock is a Buy for Short Term Traders

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Buying a stock is as easy as signing up with a registered broker, verify your information, fund your account and then tell your broker the stocks to a buy but buying the right stock for real profit is incredibly hard. This is one of the reasons timing is so powerful in the stock market; it can help you swing into profit immediately your orders are executed or fall into share price fall;

Let’s look at these two scenarios; you bought a fundamentally sound stock like GTB at N38.09 on the 18th Feb 2019 and keyed into another penny stock on the same date like Cornerstone at 20k. We already know that GTB is more stable, stronger and resilient to a sudden economic shock, but when you compare their share prices, Cornerstone stock has delivered 200% gain while GTB is down by 17% – this doesn’t mean the insurance stock is better, the only difference is in “investors sentiment towards both stock in the last 10 months“.

Understanding Sentiments: the force behind stock prices

Investors’ sentiment, otherwise known as Investors emotion, is the most powerful force behind a bullish or bearish market; it is driven by a combination of financial results, market news, policy directions and expectations, without it, you may be missing out on the single tool to spot your next best trade. As a retail investor, your decision might be limited to what you know and have read in the financial statement of your choice stocks but sentiments cover what you might not be privy to; insider information or pending market-moving breaking news.

Here is how I applied inventors’ sentiments on Cornerstone insurance and shared the call on my Whatsapp group before the stock appreciated by more than 30%:

Interestingly, a lot of beginners have not mastered the act of following sentiments when buying their first short term stocks and as such, get discouraged when their portfolio becomes red. This is the reason, I will be sharing stocks that might go up on sentiment using some proven technical tools; my pick will come from weekly top gainers; stocks that are up by at least 10% which I think might still go up in 4 – 6 weeks.

Royal Exchange:

The insurance stock closed the week at 27k, up by 17.39% (from 23k). While I anticipate a share price reversal on profit-taking (RSI on the daily chart is 91.29), this week, it still has the potential of running by 30% ( 37- 40k region ) in the next 4 – 6 weeks.

The stock is on the verge of recovering its lost value this year as YTD – it started the year at 30k, fell to 20k but then recovered to 27k – The stock is up by 35% and 22% in the last 1 and 3-months respectively, besides, investors sentiment on this stock is very strong on the weekly chart with RSI at 65.

 

Recommendations:

I’d advise you to wait for the price to fall below the current price or you spilt your money; buy at market price and average down, then take profit at 37 – 40k

Disclaimer:

The idea shared here is my personal opinion about this stock and shouldn’t be taken as a buy or sell advice, please do your due diligence.

3 Growth Stocks You Should Add to Your Portfolio in 2020

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nigeria stocks to buy 2020

The Nigeria stock market has had a rough year, with the NSE Index, in particular, shedding nearly 14% so far.  While most of the key sectoral indices are down by double-digits – NSE Banking Index (-10.53%), NSE Insurance (-5.79%), NSE Consumer Index (-26.42%), NSE Oil and Gas (-22.59%), and NSE Industrial Index (-13.63%) – some stocks have also delivered more value to shareholders that held on through the market uncertainties. For instance,  Cornerstone insurance has appreciated by 215%, Chams’ stock is up by 85%, BOCGAS is up by 52.31%, AccessBank has done 36.03%, Jaiz Bank’s stock price increased by 32%, Caverton made shareholders 30.21% richer, Union Bank gained 25%, while Wema bank and AIICO did 11.11& and 17.46% respectively.  When you match these performances with the latest rally, you would agree with me that there’s plenty for investors to be thankful for this holiday season.

We are just weeks away from the year-end, so it’s normal for everyone’s return to reset to zero as 2020 kicks off. As such, it’s common to see questions like, which Nigeria stock will deliver in 2020?.

While momentum sometimes continues for some of the stocks that performed in 2019, the market will definitely switch focus to sectors that may benefit from regulatory policies. With that in mind, I would like to summarize some of the key events that will drive the market in 2020.

  • The increase in loan to deposit ratio to 65% is expected to drive private-sector lending and consumer credit.
  • The complete restriction of local investors from the OMO market, which has switched interest to the Treasury bill hence pushed the 364-day, 180-day and 90-day yields to low levels last seen in 2016, might attract more customer deposit to bank’s coffer in form of term deposit.
  • The border closure in August 2019 might add to inflationary pressure and at the same time increase demand for local products.
  • The passage of Finance bill and accompanied 50% VAT increase to 7.5%
Best Stocks to Buy and Hold in 2020 – My Recommendations

Based on these economic events, here are my personal stock picks for next year and why I think they could add more value to shareholders that key into them right now:

Access Bank

Banks make their money from the interest they charge customers on lending,  fees and commission and investments in financial instruments. While all are great, the money generated from loan and advances to customers is considered a core income and if anything goes wrong with this line of business,  it could flash a red sign which is why they are mandated to provide for any impaired loan. Of all the Tier 1 banks, Access Bank has demonstrated its capacity to generate more returns in the retail lending space; going by its quarterly results, up to September 2019.  While most of the banks delivered marginal and lower returns on their interest income amid lower yield, Access grew its net interest income the most by 34.6%, 92.8% and 74% in its first quarter, half-year and 9-months unaudited reports. Overall its 9-month profit is up by 44.1%. So, you shouldn’t be surprised that the bank was investors’ toast this year.

See – How to Analyze Banking Stocks

Will the trend continue in 2020, you ask? When you look at the bank’s aggressive drive to shore up its loan book (now N2.7 trillion, up by 42% from N1.9 trillion in 2019) coupled with the lower cost of funds on increased term deposit and CBN’s use of BVN to recover non-performing loan, I think the bank will continue its momentum.

As of this write-up, Access bank sells for N9.25.

Access bank stock

With PE ratio at 3.98 and average year on year earnings growth of 15% – 20% in 2020, Access bank is still considered a cheap growth stock –  PEG ratio prints 0.19 and I anticipate a further rise to N12 in 9 – 12months, that’s like 32% upside potential from today’s close.

Jaiz Bank

A lot of investors don’t understand the business model of Jaiz bank – they think the bank operates like every other bank, No! Jaiz bank is a non-interest bank; they take a deposit from customers but don’t give loan to customers rather they invest the funds in revenue-generating activities or assets and share the proceeds of the investment with their customers. This is a departure from the normal model we are used to.

The bank, from its 9-month result, grew its Sukuk bond investment to N37.9b and if you compare this with N19.8b and N6.3b in 2018 and 2017 respectively, it implies a 500% increase. This rubbed off it proceeds from the investment – investment income between 2017 to 9-month, 2019 expanded from N684 million to N4.2 billion, that’s like 513%. On average the bank earns 10-11% return on its investment. The strategy the bank is adopting is to add more funds to Sukuk bond portfolio so it can generate more returns while cutting down impaired assets.

Also, its net share of profit after accounting for impairments has maintained steady growth, it increased from N5.3b in 2017 to N5.8b in 2018, the latest figure released in its 9-month report already covers 2018 full year – N6.7b which represents an average annual growth of 13%.

Profit after tax in the last 2 years has expanded by 61% on average – from N537 million, N946 million and N1.2 in its latest 9-month.  Earnings attributed to the bank’s shareholder isn’t left out as it grew by more than 100% in the same period.

When you compare all these double-digit growths with a forward price-earnings ratio of 9.42, you will agree with me that Jaiz bank is still cheap at today’s market close of 66k. I had placed a call on the banking stock when it traded below 47k and the stock delivered, besides it reached 85k before reversal.

Dangote Sugar Refinery

The consumer stocks lost its momentum to smuggling and Apapa gridlock in 2019 but I think the story is about to change; thanks to the border closure, we might see a better financial result going forward.

Even though the stock is down by 1.6% on a yeat to date basis, 44.9% and 71.43% share price appreciation in the last 1 and 3-months respectively might be a strong sign that investors are gradually mopping up the consumer stocks ahead of a bumper harvest in 2020.

Besides, I think Dangote Sugar is one of the strongest non-banking stocks to watch as it could appreciate by 41%, from today’s close of N14.6 to N20 – the MACD indicator (monthly chart) shows a potential bullish run to that level, last seen in 2017. We await the stock’s Q4, 2019 result to validate this forecast.

Dangote Sugar

At the time of this analysis, I own Jaiz bank, Access bank and have placed a buy order on Dangote Sugar Refinery, you are advised to do your due diligence.

Where to Put Your Money in 2020 & Earn Better Returns than Treasury Bills

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where to put your money

If there’s anything I can tell you about money, it is that you should fear one thing: inflation. Inflation in a lay man’s term measures how prices of goods we consume everyday change over time – the percentage (%) changes each year are called inflation rates.

Let’s say the price of a basket of tomato last year was N7,500 and this year, the same basket of tomato now sells at Mile 12 for N10, 200, we can say inflation rate is 36%. Although inflation isn’t measured by the percentage change in a single essential commodity, a collection of different varieties of food, I only used this scenario to educate an average non-finance individual.

Nigeria’s inflation rate increased to 11.61% in October 2019, the highest in 17 months – an increase that is not unconnected to increase in the price of bags of rice, carton of imported poultry outputs and raw materials following the border closure on August 2019. What does rising inflation means for you, your expenses and investments?

What this means is that if a small bag of rice, which was sold for 5,000 a few years ago, is 18,000 today, at the current inflation rate, this time next year, that same bag will cost you 20,089.8.

Now imagine you have to keep 100k aside for investments. What effects will inflation have on your plans? Let’s examine the possibilities:

YOUR GUIDE TO BUILDING WEALTH

To build wealth, you have to be mindful of investing in options that pay higher interest than the inflation rate. Investment opportunities are everywhere, but not all are equal.so what should you do?

  • ELIMINATE THE JOKERS

Before we even start, let’s just remove your bank as a serious option. Storing money in your bank’s savings account will earn you a maximum of 3-4% interest. (8% below inflation rate) if you stored your 100,000 in the bank for a year, you’d have lost money at the end of the year. But because your bank won’t pay you high interest doesn’t mean you should listen to fraudsters. If anybody tells you to invest 20,000 for a 500% return in 1 month without a convincing business model, that is not a safe investment, so run as fast as you can.

  • ASSESS THE AVAILABLE OPTIONS

Good work so far. We have now removed both the official and unofficial crooks, so what’s left? What can you actually invest in without stress?

  1. TREASURY BILLS (also known as T-Bills): These are generally regarded as the most ‘secure’ investment to make because they are backed by the government.

As of this write-up, CBN has just banned local investors from accessing the primary and secondary market of its OMO instruments, one of the highly sort-after and high-yielding risk-free investments in Nigeria. As a result of this recent development, pension funds, insurance, non-banking institutions and corporate investors are now on queue for Treasury bills, hence pushing interest rates to lower levels.

Based on the last auction result published on BusinessDay Newspaper, the interest on a 365-day, 180-day and 90-day Treasury bill are now 10%, 9% and 7.8% respectively with no sign of recovery. And when you consider inflation rate at 11.6%, it becomes clear that this isn’t a place you should even think of investing right now.

The interest earnings on T-bills are currently at 10% (1.2% below inflation rate) for 364-day investment, and dropping fast. Remember that your 100,000? Investing in this option will yield 110,000 after 1 year, but by then, the price of things will be 111,000, no thanks to inflation. By all means, you have lost money – this is what people aren’t seeing!

It is understandable that the aim of CBN’s policies on OMO auctions is to channel funds to the real sector of the economy and boost credit flows to the SMEs, rather than piling them up in the fixed income market.  But as a smart investor who is looking for the best place to invest and earn an attractive return above inflation, I can’t afford to keep a large chunk of my idle cash in a savings account that cannot keep up with the cost of living.

2. DIGITAL SAVINGS APPS: another option is these new savings apps, which are getting increasingly popular. But these apps will also invest the money you give them in the same T-Bills above, so their returns can never be higher than 9% – expect an average of 7-8% per year (4-3% below inflation rate). At the end of the day, you will still lose money.

  • MAKE THE BEST CHOICE

As you can see, a lot of the popular available options are not the best. But there are still ways you can succeed at growing money, instead of losing it.

This is my passion for charting a path to building an alternative high-yielding portfolio with low risk for my private investing clients.

So, if you would like to know how I have been investing beyond Treasury bills and fixed deposit, read through the eye-opening investing ideas I am about to share. This will help you kick start your way to profit from a N16.1trillion industry that no one is talking about but have made Tier one banks N1.15 trillion in 2018 and also get a share of over $30.1 trillion stock market opportunities in the US.

The First N16.1 Trillion Industry

This industry is as old as the world’s financial system and in Africa, it is estimated to grow by 30-50% per annum as more people – based on increasing cost of living – falls into deficit gap.

In 2018, Tier 1 banks generated N1.15 trillion from this opportunity and a breakdown of this figure showed that GTB raked in N180b, FirstBank earned N260b, Zenith bank generated a whopping sum of N273b, while Access Bank and UBA booked N250b and N190b respectively. 

The model behind this opportunity is one of the reasons banks are in businesses; they take a deposit from you, pay you single-digit 2-3% interest on your savings and earn a double-digit annualized interest of 25-30%.

But the good news is that I am currently investing in a 23-year old finance firm that will pay you a 12-17% upfront interest per annum. Rather than putting all your money in a savings account or Treasury bill, you would be better off buying an alternative high-yielding treasury note from this CBN licensed finance house.

The second $30.1 trillion stock investing opportunities:

The US stock is the biggest and most profitable stock market in the world; the exchange is home to fast-growing global brands like Apple Inc, Facebook, Google, Microsoft, General Electrics, McDonald, Tesla and lots more. These companies share prices, from their IPO listing, have appreciated by over 1,500% 5,000% or 10,000% making their early investors millionaires in US dollars.

Even though these companies have different business models, they all share one thing in their early days: they grew earnings after tax by 20%, 30% or even 50% year on year before their share prices jumped up.

While I am not promising you the same return, I believe you can get your share of the billion-dollar opportunities if you learn the secrets of buying stocks of fast-growing companies by following my stock recommendations.

If these opportunities sound good and if you are interested in it, I’d like to invite you to our private investing platform on Telegram, Click the image below:

 

 

This Stock to Buy is Among the Bullish Leaders in the Insurance Sector

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In just seven weeks, we will be saying our goodbye to 2019 but one thing remains sticky in our mind as investors, it wasn’t a favourable year for the stock market, full of patches, ups and down and unimpressive index performance, no thanks to economic and policy uncertainties. The broad-based NSE index is down by more than 15% (as of this update) with the banking sector worst hit by CBN’s stiff regulatory policies.

I can go on and on to discuss all the specific policies that dragged the stock market from its high point in 2017 to where it is now but that’s not the reason for this content. Just because the calendar is about to change over to a new year doesn’t mean we should carry the pessimist over, we might witness a forced bullish run as corporate and individual investors on account of limited access to low risk, high yielding fixed income securities begin to buy fundamentally strong stocks with positive sentiments.

As I share this new stock to buy, Jaiz Bank and Access bank’s shares, after I placed a call on the banking stocks, have appreciated past their market price, now selling for 49k and N9.2, thanks to MACD indicator.

If you’re looking for another intriguing stock ideas before we close the year, consider Law Union and Rock.

Law Union and Rock Insurance of Nigeria Plc offers life and non-life insurance services in Nigeria.

law union and rock

MACD is one of the reliable indicators I use to spot emerging bullish and bearish trend in the stock market and it works well on the higher time frame (Monthly chart).

The screenshot above is the monthly chart of Law Union and Rock Insurance plc showing the MACD crossover to the upside (the blue line represents the 9-day average while the 26-day average is the red signal line). The first previous crossover was followed by 86% stock appreciation, from 51k to 95k between Dec 1, 2015, to July 2018. The second crossover to the downside pushed the stock to the south by 55%, fell from 86k to 38k.

Here is another potential crossover to the upside starring at us, should we buy Law Union and Rock now?

Let us look at the fundamentals of the insurance company:

On the 9-month period, the company reported a net premium income of N2.3b compared to N2.1b which is a 9.5% growth year on year, profit after tax fell by 34%, from N521m to N324m. You might ask, why the stock is considered a buy despite the unimpressive result? I think the quarterly result justified the recent bullish run, while the net premium between July-Sept rose went up by 9%, profit after tax increased significantly by 52% pushing the EPS to 5.58k from 3.67k.

The stock might also benefit from the ongoing recapitalization of the insurance sector by NAICOM.

Source: NSE

In the last 3 and 6 months, investors optimism around the insurance company has helped increased share price by 17% and 10.0% respectively and I think this trend will continue.

Recommendation

I’d advise an entry below 60k with exit price between 80k-90k which is 50% upside potential.

Disclaimer: This is my opinion on this stock and shouldn’t be taken as a buy or sell signal. Please do your due diligence.

Why You Should Buy Jaiz Bank’s Stock Before It Rises Further

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jaiz bank

Several banking stocks have slumped in the last 2 years amid concerns about CBN’s uncertain and tight regulation of the banking sector but Jaiz bank is one the few financial stocks that had proven that it’s business model is not just resilient but stands defensive against regulatory challenges confronting it peers.

Jaiz Bank PLC provides Islamic banking products and services. The Bank offers services such as savings, current, salary, and kids savings accounts, as well as working capital, real estate, personal, medical, education, travel, and project finance. Jaiz Bank provides online banking, leasing, cards, and bonds and guarantee. The bank currently generates a sizeable portion of its profit from Islamic-compliant and other related investments; Sukuk bonds.

 

On a year to date basis, the bank’s stock is down by 2% outperforming the overall NSE index by 8-9%. Interestingly this loss may be reversed before year-end as investors demand a larger chunk of the bank’s outstanding shares.  Shares are already up by 8.89% in the last week, 28.95% and 11.36% in 1 and 3 months respectively.

What is driving Jaiz Stock?

In its Q1 result, revenue grew by +38.8% to N2.59bln from N1.86bln it recorded in Q1 2018 which was driven by huge increase in proceeds from Sukuk bond (proceeds from Sukuk bond skyrocketed from N249m to N817m) and other operating income while PBT grew by 225.08% to N476.46m.

Bottomline figure (PAT) followed the same trajectory as it grew by 244.09% to N428.68mln from N124.58mln recorded in Q1 2018. Earnings attributable to ordinary shareholders increased by 190% to 1.45k from 50kobo.

Why Access Bank’s Stock Could Appreciate More

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As stocks have gone back to near their all-time low prices, banking stocks are trading lower compared to their 2017 peaks which present relatively bargain opportunities for medium to long term buyers seeking capital appreciations.

While looking at the charts of all the top tier banks on monthly timeframe, I discovered interesting investing opportunities on Access bank. Besides, the combination of the bank’s impressive Q2 results in 2019, and technical setups could add to its capital appreciation between October 2019 and April 2020.

Technical Analysis

Access Bank has delivered an exceptional YTD result that beats the overall market index return of -11%, creating value for its investors this year. Starting from January, Access bank has generated 8.82% on a year-to-date basis, 13.85% and 14.73% in 3 and 6 months respectively.

However, as good as these returns have been compared to other banks, there seems to be room for further appreciation if you look at technical setup on the monthly chart using MACD.

For some of us that don’t know what MACD is, it means Moving Average Convergence Divergence, a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. Moving Average Convergence Divergence. (More details here)

The signal generated by the MACD on a higher timeframe tends to give accurate buy or sell signal compared to a lower timeframe.

Find below the chart of Access bank on the monthly timeframe and why you should consider adding the banking stock to your portfolio right now.

The chart shows the bank’s historical prices for 6 years (2013 to 2019).

How Rule of 72 Can Help You Invest & Retire With More Cash

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As a rational investor looking for a low-risk retirement and investing ideas that work in Nigeria, have you ever considered investment options based on the potentials to double your cash? This is exactly why I am sharing the number-based investing tip called “Rule of 72”.

The Rule of 72 is a straightforward computation used by financial analyst to estimate how long your money will double based on what you currently earn on your present investment. It’s that simple! To compute it, just divide your expected return on treasury bills, bond, fixed deposit or equities investment by 72. The end result is the number of years, month or days it will take you to multiply your money by 2.

As a young and growing investor, I always look at this number to select the best investment while considering the potential of capital loss too.

Rule of 72 may not be the perfect maths but I think its an investing concept you can easily adopt without punching calculators; you can do the calculation in your head. Let’s say you expect to earn 11% annual return on your CBN Treasury bill, the Rule of 72 lets you see that it takes 6 years and some month to double your money – this makes the idea worth paying attention to.

investment ideas in nigeria

How I Make Money from US Stocks – See Screenshots

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make money from us stocks

The opportunity that I’m about to share with you could be the surest information you need to diversify and profit from the US stock market, week on week or month on month. In fact, it’s so profitable that I bet big on a stock using other people’s money – you are strongly advised to start with your own money.

If you are familiar with stock trading, you should know that capital appreciation is the most sort after strategies to multiplying your money in the market; this method requires one to pick a stock he or she thinks is undervalued relative to its fair value, buy at a low price and wait for an increase.

This idea works on every market, developing and emerging stock market. Unfortunately, we have experienced the opposite in the Nigeria stock market in the last 12 months. As of this update, my overall return on investment in the market is in the negative territory (-12%) with further downside expected; no thanks to the FGN and CBN’s never-ending unpredictable policies and political uncertainties.

In order to cut down overall losses on my combined equity portfolio, I have doubled-down on foreign equities (US stocks) by sourcing additional funds from some of my close friends, selected blog subscribers so that I can take advantage of the cash margin offered by my US stockbroker.

As of this update, I have closed 10 winning trades with each netting me an average of 20% return. I settled for a moderate 20% return so that I can easily compound my returns in 6 months to 1 year.

Here is a screenshot of my US stock brokerage account showing 2 of the 10 winning trades in my account history:

This stock market profits were boosted by margin trades; leverage that lets you borrow money from your stockbroker so you can buy more shares with less. For instance, if you opt for 1:5, it means you can use 5x whatever you are investing in the stock market. Let’s say you invested $200, it means you can buy $1,000 worth of shares in a company and if the price goes up by 10%, you will earn 50% return on your money or vice versa.

I don’t advise anyone to start trading US stocks like this unlike you have mastered the profit system I discussed in my video training.

3 Reasons You Should Trade US Stocks & How to Start

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The US stock market is dubbed the largest and most liquid exchange in the world with a market capitalization comfortably sitting above $50 billion. The exchange “houses” some of the best, finest and fast-growing global brands across different sectors like consumer, energy, financials, health care, industrial, IT, materials, real estate, telcos, and utilities.

Beyond the sectors mentioned, the US stock market also offers a variety of fund and ETF listings that reflects different categories of assets exposures one can think of; oil, gold, currencies, emerging markets, treasuries/bond up to cryptos. This means that whatever asset classes you may be interested in gaining exposure to, you can leverage on these diverse options to build foreign currency portfolio away from the Naira.

While investors are encouraged to invest in their local market so that indigenous companies will easily access capital for expansion, I strongly believe that the unique opportunities in the US stock exchanges are strong reasons one should diversify or hedge against the risk of single currency investments:

1. When you buy U.S.-listed securities… you’re buying the world

A larger percentage of the annual revenues generated by companies listed on the NYSE, NASDAQ, and AMEX actually come from outside the U.S. In 2018, an average of 52% of the sales posted by the top 500-listed companies ( S&P 500 index) didn’t come from the U.S. Well, you already know that a good number of companies listed in the US stock market are actually foreign companies – The reason the choose U.S. exchange is because that’s where the real money is.

How to Diversify and Grow your Portfolio in US Dollars

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When it comes to investing and building a lasting wealth, professional investors advise that you spread your money around different assets classes – that’s, “diversify” your investment. Why? because it’s often believed that diversification protects you from losing all your money during unexpected market swings.

Besides, the pending devaluation of our local currency against major foreign currencies means that your investment in Naira denominated assets alone – stock, properties, or bond – may expose you to the high risk of putting your eggs in one basket. Just recently, it was all over the major newspaper headlines that the CBN had subtly devalued the Naira from N360 to N380 to the US dollar which 5.5% fall in value.

As of this update, the US dollar, in the parallel market, sells for N420, 16.6% fall with the futures market already reflecting a further fall by as much as 38.3% to N500+. No thanks to the COVID-19 pandemic that has crippled business activities across the globe, hence drive oil demand to historic low as countries follow the lock-down rule.

This is just one of the unexpected events that expose us to sudden economic shocks. The truth is whether you own stocks, treasury bill, bond, or real estate, as long as your assets are in Naira, your portfolio is still in one basket and exposed to exchange rate shock.

Having a lot of investments doesn’t mean diversifications, you need to understand the real diversifications beyond equities, real estate, and fixed income securities. This is diversifications away from local currency assets to the US dollar-denominated assets.

As Nigeria economic risk worsens, it makes more sense to suggest foreign assets diversifications; where one diversifies and build short or long term foreign currency portfolio.

4 reasons you should diversify into US dollar portfolio:

If you want to know why putting your money into foreign currency assets matters, there are interesting reasons:

  1. We are oil-dependent and are largely exposed to sudden shock that follows lower prices. Based on historical antecedents, lower oil prices always exposes the economy; equities, real estate, even banks’ asset qualities are wiped out.
  2. Different types of investments are affected differently by world events and changes in economic factors such as interest rates, exchange rates and inflation rates, so it makes sense to diversify into assets to take advantage of longterm USD/NGN exchange rate appreciations; we call this hedging.
  3. Foreign diversification enables you to build a portfolio with generally less risk than the combined risks of one-currency assets.
  4. If your portfolio is not diversified, it may carry the unnecessary risk of being affected by inflation.

Private Investors is here to help you diversify and build USD assets. We are a community of traders that trade US stocks for capital appreciation.

The 3 Indicators I Use to Accurately Predict Bitcoin & Etherum Prices

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best technical indicators for cryptocurrency trading

This guide contains my best technical indicators for cryptocurrency trading – copy the tools I use to accurately predict Bitcoin and Etherum – before their prices went up further by 50% after I bought at $6,300 on the Luno platform.

I have been trading Bitcoin and Etherum actively in the past 3-4 months after a friend encouraged me to re-try the cryptocurrency market. He believed that my good use of technical analysis in the stock market would help me spot trade opportunities more in the crypto-currency market.

Since then, I have generated over 50% profit trading Bitcoin and Etherum. My decision to trade Bitcoin and Etherum isn’t unconnected to the fact that they occupy a larger portion of the cryptocurrency market value and most widely followed by top crypto analyst and financial news websites.

This isn’t my first time of trading cryptocurrencies but was discouraged when I had issues with some of the Nigeria exchanges.

I trade these two cryptocurrencies on the Luno platform via my mobile app, a simple intuitive user-friendly mobile exchange that makes it easy for me to fund my wallet in Naira, then initiate exchange to Bitcoin or Etherum at the current market price with instant execution. On the Luno platform, you fund your verified account with Paystack or PayU payment solutions.

As a technical trader in the stock market, here are the 3 powerful technical indicators I deployed to spot trends in the cryptocurrency market using Bitcoin as a case study.

  • 21/55-Day Moving Average

This indicator measures the average price of Bitcoin for a specific period of time. I use 21 and 55 simple moving averages to spot market trend; whether it is bullish or bearish. While the 55-day MA tells me how the crypto is trending in the last 3 month, the 21-day MA follows market performance in the last one (1) month.

2 Growth Stocks You Can’t Afford to Miss in 2019

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stocks to buy in 2019

While the NSE all share index has been more volatility lately compared to their counterparts in emerging markets, I still believe that there is still short to medium term growth potential for a patient, risk-tolerant investors that pick stocks at the bottom before they rally.

One key secret of such investor is that they no longer wait for final results before picking actual stocks to buy but uses “growth numbers posted on the first quarter, to spot growth stocks that are already on track to beat previous full year’s result“, then buy ahead of the anticipated market rush.

Today, I have picked two (2) sure stocks you can buy on dip and are clearly on track to deliver better than expected result in 2019.

Chams Plc

Chams PLC offers smartcard technologies. The Company offers a public access retail billing and collection system with Internet access. Chams also offer home office products.

Last year, the technology stock broke its record of a 3-year consecutive loss as its reported a profit after tax of N380m, a 131% growth compared to a loss of N1.26b declared in 2017. Interestingly, this is the highest profit posted by the company in 5 years.

The highlight of Chams’ financials in the previous full year shows that sales grew from N1.9b to N3 (57%), while the cost of sales expanded by 83% but didn’t deter the company from posting a high gross profit of  N785m compared to N742m.

A reduction in administrative expenses and write back of VAT provisions contributed to the company’s shift to positive territory, from an operating loss of N1.2b to a profit of N31m.  With shareholders equity of N1.95b, return in equity for the year was 19.4% compared to a loss.

Chams plc has also proved that the growth in the previous year’s result could be sustained as it reported an impressive Q1 2019 result.

At What Price Will CCNN Stock Turnaround?

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CCNN stock price

Nothing puts a smile on one’s face like a high- flying growth stock. Not only will stock in your portfolio that has returned 100%, 200% or even 500% help you build wealth faster but it also makes up for several losing stocks.

While this makes high-growth stock appealing, how can one spot such an opportunity before others? Amongst several strategies shared by top investment analyst, turnaround stock trading strategy seems to be the most rewarding of all.

What is a turnaround stock strategy?

In simple term, turnaround strategy picks temporarily out-of-favour stocks with upside profit potential. Of course, not all bearish companies offer potential turnaround opportunity, but this investing principle believes that bearish stocks with real value will always prevail regardless of the stock’s setback.

In the NSE market, one of the stocks that have been trending down week on week and has got everyone asking questions after a significant decline in EPS to 44k from N2.57 is Cement Company of Northern Nigeria (CCNN).

The company is engaged in the production and marketing of cement under the brand name “Sokoto Cement”.

In its latest financial results, the stock recorded an 82.7% fall in distributable earnings following a merger arrangement with Kalambaina Cement Company Limited 2018. Since FY2018 was released, the stock has lost up to 30% of its market value and might shed more as investors price in expected full year’s EPS for 2019 (based on 13.1 ordinary shares outstanding compared to pre-merger shares of 1.2b).

As of this analysis, CCNN stock trades for N14, 56% down from its 52-weeks high of N32.At the current market price, this may not be a stock to trade now but it does offer real value that could reward smart investors who key in at a bottom price.

Here are some key metrics that support the fundamentals of CCNN:

Is The New Access Bank Destined for Greatness?

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access bank shares.PNG

Investors love banking stocks that beat the market index without getting ahead of its financials or risking sell-off on overvaluation. In this financial analysis, we looked at the new Access bank, short term chart analysis, and basic banking metrics to check if the recent financials support strong price growth.

What we’re looking for?

We will be looking at key areas like:

  • Net Interest and Profit After Tax
  • Efficiency
  • Return on Equity
  • Customers’ Deposit
  • Book Value Per Share

In the bank’s recent result, Access bank reported a significant growth in net interest income to N53b (from N39.6b in the previous first comparable quarter). This was largely boosted by interest on investment securities which grew by 227%.

This growth at the top level, coupled with the net gain of N6b on foreign exchange transaction, were supportive of the 86% growth in profit after tax to N41b.

On the efficiency level, a key metric that tells how the bank is able to manage its operating expenses. Access bank efficiency ratio prints at 54.6%, down from 55.7%. While this is below the industry standard of 60%, the bank needs to cut a chunk of its operating expenses to rank at per with its peer.

Return on Equity, a measure of how the bank utilised shareholder’s fund, prints at 7.1% compared with 4.5% reported in the previous quarter. This represents a 57% growth Q on Q.

Customer deposit from the newly merged entity also grew by 35% to N4.6tr which is a form of cheap money (that comes with lower interest expenses) expected to generate higher earnings from an investment in fixed income market.

The customer deposit to liability ratio, a key measure of how the bank generates cheap money is 79%, a slight increase from 77% reported in Q1 2018. The significance of higher deposit/liability to a bank is that it tends to pay lower interest on savings/term deposit compared to interest on debt instruments like commercial paper, and Eurobond.

Since we can’t ascertain the full year’s earning with the first quarter result, it makes sense to use the net asset valuation approach to estimate the value of the bank’s stock. An asset-based approach identifies a company’s net assets by subtracting liabilities from assets. The asset-based valuation is often adjusted to calculate the net asset value of a company based on the market value of its assets and liabilities.

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