- How to pick fundamentally sound stocks
- Stocks to watch
Stocks prices seems to be waking up. There seems to be this renewed interest in the Nigerian equity market. Such scenarios do often work out to favour those who have always been in the market. Why is it so? It is just simple and elementary economics that the higher the demand, the higher the price of such good.
Renewed interest in stocks will awaken the prices of some dead or even dying stocks. Stocks with no fundamentals strong enough to back up the rising prices will begin to show faces. Make sure you invest not in rising prices but in sound back up figures to support whatever the price might be doing.
Renewed interest in stocks will push prices of some good stocks higher than normal. You need also to note this and avoid abnormal price surge.
Renewed interest in stocks will create early sale opportunity for those who have held some stocks for long. If the reason for holding such stocks for long has been due to poor price performances resulting from poor fundamentals, all you need do is allow a recovery; if price could go beyond what you bought, why not allow your profit to run? But don’t be too greedy. At a time, seeing the nature of the stock being which not sound with enough fundamentals, you will have to sell, recover your investment and look for opportunities
During such awakened price movement, don’t do ‘Buy and Hold’. Invest with a short term in view. But then, such investment should be in stocks where you may choose to stay long in case your investment in the short term does not just crystalize as projected. In other words, invest in stocks that you can always have reasons to hold.
What are these reasons that will make you to say you want to hold on to a stock if the price should fall below how much you bought?
- That you have access to their past results; and these results have been consistently good.
- That you can project their possible results and the projection is also positive.
- That the company operates in good industry with favourable government policy
- That the company has good products and services as back up.
- That they have good Board and Management.
- That they have age as advantage; and not that they are mere starter.
- That the price and fundamentals are not parallel; that is they are not singing discordant tune. It is not that the earnings are declining and the prices are growing. But the earnings and the prices are moving together. So, you learning and laying hold on the basic ratios will lead you as far as this is concerned.
- Look at their price performances in the last one year which is the 52 weeks range
- Look at their prices in the course of the year.
- Consider prices of other stocks in the same price level, in the same industry within the market and in the market as a whole.
- The knowledge of technical analysis to guide you on current price position will be added advantage. Technical analysis is a measure of market reactions and actions with probable reactions
Note that making money in stocks will require lots of efforts, work, thinking, analysis, discussions with people and interaction. If you are not ready for all these, please leave stocks alone before you gamble with your money and lose at which period you will come out to begin to say that the market is bad.
Stocks to Watch
What are the charts saying about some specific equities on the floor of the Nigerian Exchange? There are some that are actually looking high; there are some that are within buying range. Please note that we are not relating price with fundamentals, we are only expressing what can be read from the charts on these equities.
- ABC Transport is within buying range. The price will fumble and wobble as it goes up.
- Access is now conveniently looking up.
- Africa Prudential is trending down, but the price is not overpriced
- AIICO is within the buying range
- Berger paint is too high
- BUA Cement is trending too high
- Cadbury is within buy range if you can wait.
- Champion Breweries might not rise geometrically but the stock is within buy region.
- Consolidated Hallmark Insurance is too high in price. It needs to shed a little point before you buy
- C&I Leasing is too high
- Conoil is too high
- Cornerstone Insurance will need to relax a little before becoming comfortable enough for you to buy.
- Custodian Investment is within the buying range
- Cutix Plc is high. The earnings are very good but the price is saying for now too high.
- Dangote Sugar is good to go after two or more gains.
- Eternal Oil will be too high in price but for now it still has a little bit of capacity to move up a little bit.
- Ecobank Transnational Incorporated is good to buy.
- FBNH, the big elephant is looking cheap for now.
- FCMB is looking down but the price is within a buy range.
- Fidelity Bank is good to buy.
- Fidson is flat but the price is within buying range.
- Flour Mills seems high
- GSK is very low in price, if you can wait.
- Guaranty Trust Bank is looking good to buy
- Guinness is actually cheap.
- Honeywell Flour is within the buying range.
- International Breweries is down enough in price.
- Japaul Gold is trending down but the price is now within buying range. The earnings of the company is trying to improve, let us see how far they can go.
- Julius Berger is good to buy
- LASACO is low in price.
- Linkage Assurance is low.
- Livestock Feeds is high on the chart.
- AXA Mansard is trending down, but the price is within the buying range
- May & Baker is looking sweet to buy
- Mutual Benefit Assurance is within the buying range
- Nigerian Breweries is high
- NEM Insurance is low
- Neimeth is low
- Oando is within the buying range, but we are not telling you to buy. We need more results from Oando to convince investors.
- PZ is looking too high
- Regency Assurance is trending down, but the price is within buying range.
- Stanbic IBTC is looking high.
- Sterling Bank is trending down, but the price is within buying range.
- Transcorp is good.
- UAC Property is good to buy
- UACN is trending down, but the price is within buying range
- UBA is a bargain at current price
- Union Bank is now buyable. It remains the bride between Access Bank and Zenith Bank. Let us see where it will eventually end.
- UCAP is within the buying range
- Unity Bank: You run big risk buying this stock for now. CBN is looking for buyer for the bank. We wait to see where it will eventually end. There are stories of illiquidity surrounding Unity Bank
- WAPCO (Lafarge) is good enough at current price level.
- Coronation Insurance (WAPIC) is not bad.
- Wema Bank is within good buy range
- Zenith is good to buy at the current price.