- Stocks to watch
Wole Olajide
The stock market last week closed on a bullish note with 2.95% growth week on week. This is occasioned by renewed buy interest in equities by investors, triggered by impressive Q4 earnings release. Year to date, the market has returned 5.78% with the All Share Index and Market Capitalization at 54,213.09 points and N29.528 trillion respectively.
As projected in our last publication that prices of equities will go up as a result of impressive result released by a number of listed firms on the floor of the Nigerian Exchange. We expect further price rally on NGX as more results will still be released.
The market is anticipating the Audited reports of these companies with improved dividend payout. At that, discerning investors have started taking position in order to get dividend. Companies that did well in their Q4 will most likely do well in their audited reports with possibilities of improved dividend payout.
MTN and Gerugu Power Plc last week declared final dividend of N10 and N8 respectively. This positively impacted their prices as Geregu grew by 36.88% to N219 and MTN grew by 5.73% to N237.9.
Audited results impregnated with dividends, most especially from banks that opted not to post their Q4 results will be released by the end of February 2023. Also by the end of March, the remaining Audited reports will start hitting the market.
Dividend paying stocks with impressive earnings would definitely be rewarded by the market with commensurate price growth. This is why investors should start taking position now.
We have always advised investors to take position in fundamentally sound stocks. Quite a number of them can give good dividend yield and price appreciation. To mention a few, the following stocks can be considered for strategic positioning.
PRESCO
Presco Plc for the period ended 31 December 2022 achieved growth in its top line and bottom line figures. The Group reported a turnover of N83.065 billion for the 12 months period, up by 75.14% from N47.426 billion reported the previous year.
Profit after tax grew year on year by 11.11% to N21.47 billion from N19.32 billion reported the previous year. Earnings per share of Presco stands at N21.47, up by 11.11% from the EPS of N19.32 achieved the previous year.
At the share price of N150.8, the P/E ratio of Presco stands at 7.03x with earnings yield of 14.23%.
Currently trading at N150.8, the share price of Presco has a year high of N200 and year low of N94.5.
There is an uptrend potential of 24.6% in the share price of Presco, relative to its 52 weeks high of N200.
Presco already paid an interim dividend of N2. The Group is likely to increase its dividend payout or pay N6.60 it paid last year.
OKOMU
Okomu Oil Palm Company Plc in its Fourth Quarter report for the period ended 31 December 2022 reported a turnover of N59.246 billion, up by 58.43% from N37.395 billion reported the previous year.
Profit after tax for the 12 months period was N17.337 billion, up by 50.25% from N11.539 billion reported the previous year.
Earnings per share of the company stands at N18.17, up by 50.25% from the EPS of N12.10 reported the previous year.
At the share price of N181.1, the P/E ratio of Okomu stands at 9.96x with earnings yield of 10.04%.
Currently trading at N181.1, the share price of Okomu has a year high of N216.9 and year low of N127.8.
There is an uptrend potential of 16.51% in the share price of Okomu Oil, relative to its 52 weeks high of N216.9.
Okomu has already paid two different interim dividends of N7 and N2 in June and September 2022 respectively.
Cumulatively, N9 has been paid as interim dividend to shareholders. Based on their improved Q4 2022 earnings, Okomu should be able to comfortably pay a final dividend of N8 or even more.
FIDELITY BANK
Fidelity Bank reported Gross Earnings of N335.9 billion for the period ended 31 December 2022. This represents a growth of 33.94% from N250.8 billion reported the previous year.
Profit after tax for the 12 months period was N47.16 billion, up by 32.56% from N35.58 billion reported the previous year.
Earnings per share of the financial institution stands at N1.63, up by 32.56% from the EPS of N1.23 achieved the previous year.
At the share price of N6, the P/E ratio of Fidelity Bank stands at 3.69x with earnings yield of 27.13%.
Fidelity Bank paid final of 35 kobo dividend the previous year. With already paid interim dividend of 10 kobo in June 2022, we expect an increase in dividend payout by the financial organization.
Currently trading at N6, Fidelity Bank has a year high of N6.03 and a low of N2.83.
With the Book Value of N11.30, relative to its current price of N6, Fidelity Bank is considered cheap.
FCMB
First City Monument Bank (FCMB) in its Fourth Quarter report for the period ended 31 December 2022 achieved significant growth in its topline and bottom line figures.
The financial institution reported the Gross Earnings of N281.75 billion for the 12 months period, up by 32.89% from N212 billion reported the previous year.
Profit after tax grew year of year by 55.81% to N32.59 billion from N20.92 billion achieved the previous year.
Earnings per share of FCMB stands at N1.65, up by 55.18% from the EPS of N1.06 achieved the previous year.
At the share price of N4.9, the P/E ratio of FCMB stands at 2.98x with earnings yield of 33.59%.
FCMB paid a final dividend of 20 kobo last year. We expect FCMB to increase its dividend payout for the year under review.
Currently trading at N4.90, FCMB has touched a high of N5 and a low of N2.92 in the past 52 weeks.
With the Book Value of N13.64, relative to its current share price of NN4.90, FCMB is considered cheap.
ACCESS HOLDINGS
Access Holdings is currently trading at the share price of N9.20. In the past 52 weeks, the stock has touched a high of N10.60 and a low of N7.50.
It is trading 13.21% away from its 52 weeks high of N10.60, which implies an uptrend potential of 13% for Access Holdings.
It has the capacity to surpass its 52 weeks high of 10.60 based on the sound fundamentals inherent in company.
We expect growth in the earnings of Access Holdings and of course improved dividend payout for 2022 year end.
It has paid an interim dividend of 20 kobo in June 2022. It paid a final dividend of 70 kobo in 2021 year end.
With the Book Value of N29.11, Access Holdings is considered very cheap, relative to its current share price of N9.20.
UBA
UBA is currently trading at N8.45 with a 52 weeks high of N8.85 and a low of N6.55.
It is trading very close to its 52 weeks high of N8.85 by 4.52%. UBA has capacity to surpass its 52 weeks high of N8.85 as it is trading far below its fair value.
The price of UBA is capable rising if their Q4 earnings is impressive with probable increase in dividend payout.
Considering its Book Value of N23.64, relative to its share price of N8.45, UBA is underpriced.
FBNH
First Bank of Nigeria Holdings is currently trading at N11.95 with 52 weeks high of N12.4 and a low of N8.2.
It is trading to closer to its 52 weeks high of 12.4 and has the capacity to surpass it, should their Q4 result be good with increased dividend payout.
With the book value of N24.89, relative to its current share price of N11.95, FBNH is considered very cheap.
GTCO
The share price of GTCO is currently trading at N25.2 and it has touched a high of N28.05 and a low of N16.80 in the last 52 weeks.
It is trading 10.16% away from its year high of N28.05, which implies an uptrend potential of about 10% for GTCO.
The Book Value of N29.66, relative to the current price of N25.2 implies that GTCO is cheap.
GTCO already paid an interim dividend of 30 kobo. We expect GTCO to pay at least a final dividend of at least N2.70.
ZENITH BANK
Zenith Bank is currently trading at N25.2 and has touched a high of N27.4 and a low of N18.90 in the past 52 weeks.
It is trading 8.03% away from its 52 weeks high of N27.50. Zenith Bank has the capacity to surpass its 52 weeks high of N27.50 based on the expectation that Zenith will grow its earnings in FY 2022.
Zenith has paid interim dividend of 30 kobo in June 2022. We expect Zenith to pay at least a final dividend of N2.80 or more for 2022 year end.
Going by its Book Value of N41.68, relative to its current price of N25.2, Zenith Bank is cheap and embedded with growth potentials.