Cheap stocks for strategic positioning

The Nigerian stock market eventually closed the First Quarter of the year 2022 on a positive note as it recorded 9.95% growth. In a matter of weeks, Q1 2022 results should start hitting the market.

Based on the quality of FY 2021 results released to the market, coupled with dividend declarations, a good number of stocks were rewarded with commensurate price appreciation.

Profit taking and the fact that prices of many stocks were marked down to adjust for dividend has brought down the prices of stocks. The lower the prices of stocks, the better as it is creating new entry opportunities for investors.

There are many fundamentally sound stocks that are trading below their fair value which investors can consider for positioning. To mention a few, the following stocks can be considered:

ACCESS BANK

The share price of Access Holdings Plc is currently trading at N9.70. In the past 52 weeks, the stock has touched a high of N10.60.

The Holding Company has notified the Nigerian Exchange and the investing public of the proposed interim dividend payout for Q1 2022. The news is capable of pushing the share price higher than the current level because it is rare for a Company in Nigeria to declare dividend in First Quarter.

A position in Access Bank at the current price without doubt has uptrend possibilities as the stock is undervalued.

With the Book Value of N29.54, Access Holdings is very cheap, relative to its share price of N9.70.

UBA

UBA closed at N7.70 on Friday after it was marked for dividend the previous week. It has touched a high of N8.85 in the past 52 weeks.

UBA is trading 12.99% away from its 52 weeks high of N8.85. This implies that there is uptrend potential in UBA.

At N7.70, UBA is very cheap as it is trading far below its book value of N23.53.

ZENITH BANK

Zenith Bank shed 16.73% of its share price last week to close at N22.40 from N26.90. This was after it was marked down for dividend. Profit taking brought the prices further down. This a good BUY for Zenith Bank.

With the Book Value of N40.76, Zenith Bank is considered cheap, relative to its share price of N26.90.

FLOUR MILLS OF NIGERIA

Flour Mills will conclude its year-end by 31 March 2022. Based on the impressive results released in its Q3 as at December 2021, Flour Mills is bound to surprise the market with a fantastic Full Year audited report. There is also possibility of improved dividend payout. Smart investors can take position ahead the possibility of good outing for Flour Mills of Nigeria.

At the current share price of N31.05, Flour Mills has an uptrend potential as it is trading below its Book Value of N45.11.

FIDSON HEALTHCARE

Fidson Healthcare declared 50 kobo dividend in FY 2021. This is 100% increase in dividend payout when compared to 25 kobo dividend paid in FY 2020.

The company achieved significant growth in its top line and bottom line figures for 2021 financial year.

Earnings per share of the company stands at N1.78, up by 208% from the EPS of N0.58 reported the previous year.

At the share price of N8.05, the P/E ratio of Fidson stands at 4.51x with earnings yield of 22.15%.

FIDELITY BANK

Fidelity Bank declared 35 kobo dividend to shareholders. At the current share price of N3.43, a position in Fidelity Bank will give dividend yield of 10.20%.

The Financial Institution recorded growth in their topline and bottom line figures in FY 2021, compared to the figures achieved in the covid year.

Earnings per share of the bank grew by 33.5% to N1.23 from the EPS of N0.92 reported in FY 2020.

At the share price of N3.43, the P/E ratio of Fidelity Bank stands at 2.79x with earnings yield of 35.80%.

GTCO

The share price of GTCO has dropped to N21.50 from a high of N33 in the past 52 weeks. It is trading 34.85% away from its year high of N33, and this implies an uptrend potential for the stock.

With the Book Value of N30, relative to the current price of N21.50, GTCO is considered cheap.

FIRST BANK OF NIGERIA HOLDINGS (FBNH)

The market is still expecting the FY 2021 financial report of the Big Elephant. The stock closed on Friday at N12.20. In the past 52 weeks, FBNH has touched a high of N12.90 from a low of N6.25.

This means that an investor who took position in FBNH at a year low of N6.25 would have made 95.2% gain, relative to its current price of N12.20.

There is still uptrend potential in FBNH as it is trading below its Book Value of N20.99.

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