Strategic Investing when Market Tumbles

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LAST WEEK REVIEW:

When stock markets or prices of equities tumble, it is as if the descent will never end hence, investors panic, thinking the end has come. In the same vein, investors always do desire that market uptrend is not only sustained but remains in session forever, not knowing that the proverbial festival when masquerades in their colourful attires display unprecedented artistry is only but for a short while. Even in a bear market, one or two days of positive outings should be expected.

The Nigerian market is in a descent but not in response to poor earnings reports but as indicator of the Nigerian flip-flopping economy. It was a four of red against one day of green last week as the All-share Index of the Nigerian Stock Exchange closed the week down 1.11%.

NSEASI had opened the week from the close of previous Friday at 41,935.93. Monday through Wednesday trading sessions were down with higher number of stocks on the losers’ chart and only a handful among gainers. Respite came Thursday with a recovery of 0.33%. Friday started well before caving in to a close of 0.39%. The closing figure of 41,472.10 brought the WoW performance to -1.11%.

 SECTOR INDEXES:

With a WoW growth of 3.31, NSE Banking Index led its peers in the week under review. It is however down -6.67 MtD. NSE PENSION ended with WoW growth of 1.67 while NSE CG Index also recorded WoW growth of 1.07. It is however down 4.25% MtD.

On the flip side, NSE Insurance was down -3.06 % to emerge worst performer in the week while NSE Industrial Goods Index lost -2.84% with NSE Consumer Goods Index losing -2.19% to portray investors’ negative perception of production and trades within the Nigerian economy.

 

  • GAINERS

Aside from GSK and Fidelity being the best two highest gainers for the week, percentage gains were generally mild. While GSK grew 21.43% WoW as a result of the N7.10 and 40kobo cash dividends so declared, Fidelity recovered losses of previous weeks to record 17.75% WoW growth in price. Thirty one others recorded varied percentage of price growth in the week.

 

LOSERS:

Of the forty nine losers in the week, FTN Cocoa and Unity Kapital led with 21.43% WoW decline. Both are groaning under NSE’ new price rule hence, selling at lowest prices ever. Others in same category include Niger Insurance, Multiverse Resources and African Allinance Insurance Plc.

 

POSSIBILITIES THIS WEEK:

  • The market this week largely portrays mixed outlook. There is bound to be attempts at reversing up but this will be resisted. Consequently, one or two days of green days might be recorded, if other results come in positive in addition to UBA’ dividend report that might lift market’ spirit from the beginning of this week.

 

  • A few ‘A-brand’ equities that were pulled down in the wake of their audited reports despite the earnings and dividend performances were seen rising before the close of trading activities last week. They most likely will assume stability this week.

 

 

  • At the end of the week, nerves are expected to be calmer.

 

  • Technically, the movements look turbulent but largely, market remains within buy region as sell pressure mounts.

 

STOCKS TO WATCH FOR THE WEEK:

  • ACCESS BANK PLC

Thursday’s sell off of over 126million units was massive but that much was taken. With about 120,000 left before close of trade on Thursday. Consequently, there was a price shed of 5.5%. by the time another over 86million units were traded Friday, though there were still outstanding offer of 110,000 units, the price decline was halted with a growth of 1.8%. Access will rarely stay below 11.50. It remains a buy at any price below that. 40k dividend closes April 13. Q1 earnings stand to boost price performance.

This is worthy of note. The bank’s PER even at the lower EPS of N1.84 is 6.141 which makes the stock largely underpriced.

 

  • UBA

This stands to be the stock of the week. From a full year EPS of N2.22, a final dividend payout of 65kobo was announced Friday. This, when added to the interim gives 85kobo. Dividend yield at current price of N11.50 comes to 7.5% and PER to 5.180. These figures are good enough for short, medium and long term hold.

Technically, UBA halted a five straight sessions of losses Friday when it gained 0.4% in price. A few indicators could be interpreted as bearish but money flow and RSI are all within buy outlook. With the audited at hand, indicators might reverse. If the stock price is seen lower than current level, it becomes cheaper and purchase more suitable.

 

  • AFRIPRUD:

Stochastic and MACD are showing bearish signals but money flow is not looking bad. Ditto Williams %. I will recommend the stock for a medium term hold premised on the 40kobo cash dividend payout in comparison with other stocks on the floor of the stock exchange with almost triple its price. Closing with a 200,000 excess bid at close of trading Friday suggests strong open Monday.

 

  • GSK:

Technically, GSK is dwelling at overbought region and should decline. This suggests that it is no longer recommended for fresh purchase but then, the total of N7.50 cash dividend on a price of N25.50 is attractive because that brings the dividend yield to 29.4%, consequently, the over 11million units closing bid size on Friday. This invariably imposes a bullish tendency on its price this week. What becomes the stock again after the price is marked down on April 24, 2018 in the issue for considerations to existing and potential investors.

 

  • Past performances revealed that it is not difficult for GSK, after a high price, to descend and even remain low for a season until there is a push again.
  • Its EPS for the 2017 December 31 period is 41 kobo out of which 40 is being declared as dividend.
  • Relating current price and EPS, the price is too high to carry current EPS.
  • Special dividend of N7.10 amounting to N8.491bn is from reserves.

16 OTHER STOCKS TO WATCH FOR THE WEEK:

  • FBNH
  • FIDELITY
  • UCAP
  • ZENITH
  • ABC TRANSPORT
  • CUSTODIAN AND ALLIED
  • JAPAUL
  • DIAMOND
  • GUARANTY
  • HONEYWELL
  • LASACO
  • LIVESTOCK FEEDS
  • OKOMU
  • REGENCY ALLIANCE INSURANCE
  • WEMA
  • ZENITH

 

 

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