- Stock prices to be driven by earnings expectations and bargain hunting
Ruth Ibikunle
The Nigerian stock market last week closed on a positive note with 0.83% growth amidst buy interests and profit taking. Year to date the stock market has returned 17.55% with the All Share Index and Market Capitalisation at 120,989.66 points and N76.339 trillion respectively.
In a stock market review with Gilbert Ayoola, a seasoned capital market analyst, the following were discussed:
Excerpts:
- The stock market last week closed on a positive note with 0.83% growth. What is the outlook for the new week?
The Nigerian stock market closed last week in the green, with the All-Share Index up 0.83% to 120,989.66 points, after several weeks of gains. The rally was driven by buying interest in large-cap stocks, which outweighed declines. This reflects investor confidence and continued rotation into defensive and undervalued stocks.
As the market eyes the start of Q2 earnings season, sentiment is expected to remain broadly positive but cautious. Investors will likely take position in fundamentally strong stocks, especially in the banking and industrial goods sector, while profit-taking could moderate gains. Overall, a mixed but upward-biased trend is anticipated, driven by earnings expectations and bargain hunting.
- What is driving the growth in Meyer, RTBRISCO, and FTN Cocoa, UPDC, Neimeth, and Champion Breweries?
Investors’ interest in select small- and mid-cap stocks on the NGX—Meyer, RT Briscoe, FTN Cocoa, UPDC, Neimeth, and Champion Breweries—has surged in recent sessions, reflecting a combination of speculative momentum, improving fundamentals, and sector-specific tailwinds. Investing in such often carries higher risk but potentially higher reward, especially amid upcoming corporate disclosures and earnings releases.
For these stocks such as:
MEYER — Meyer’s upward trajectory is largely driven by strong earnings growth, improved margins, and strategic repositioning in Nigeria’s paints and coatings industry. Its recent performance suggests effective cost controls and growing market share, attracting investors seeking value in the industrial goods sector.
RT BRISCOE — The rally in RT Briscoe is supported by ongoing restructuring efforts and improved operational efficiency. The company has benefited from renewed optimism around the automotive and equipment leasing space, with investors speculating on a potential turnaround backed by asset optimisation.
FTN COCOA — FTN Cocoa has gained attention as a proxy for soft commodity plays, amid global cocoa price volatility and supply disruptions. The stock is benefiting from renewed investor focus on agriculture and export-driven sectors, with speculative buying also contributing to price appreciation.
UPDC — UPDC’s price rise reflects growing optimism in the real estate and property development sector, buoyed by low stock valuations and potential asset sales. The company’s efforts to clean up its balance sheet and restructure operations have caught the eye of bargain hunters forecasting on a long-term recovery.
NEIMETH — Neimeth continues to draw investor interest due to its strategic expansion plans, including new production facilities and renewed focus on local drug manufacturing. It also benefits from positive sentiment around the healthcare sector, which has seen increased policy support.
CHAMPION BREWERIES — Champion’s recent rally is underpinned by its status as a potential acquisition with consolidation target in the beverage industry. Improved revenue performance and expectations of corporate activity have made it attractive to investors looking for growth plays in consumer goods.
- Why is PZ trending down?
PZ is trending downward, currently trading at N32.40, below its N39.00 52-week high and recent market high of N36.00, due to a combination of profit-taking, weaker consumer spending, and investor caution ahead of earnings releases. After a strong rally earlier in the year, many investors are locking in gains amid concerns over margin pressures from rising input costs and a challenging macro environment.
While the stock remains fundamentally sound, near-term performance stays soft. Investors are watching ahead of upcoming Q2 earnings and assess whether the current price offers a value entry point, especially if earnings support a turnaround and dividend strength.
• How attractive is Oando at N55.05?
Oando trading at N55.05, just shy of its recent market high of N55.15, and comfortably above its 50-day moving average of N52.00. This positioning signals strong bullish momentum and sustained investor confidence in the stock.
The stock’s appeal is underpinned by a combination of improving fundamentals, such as rising global oil prices, debt restructuring progress, and expectations of stronger earnings performance. Its proximity to the market high suggests continued accumulation, while its distance from the 50-day MA implies that short to medium-term sentiment remains positive.
At N55.05, Oando still offers value for momentum-driven investors and those predicting on further sector tailwinds. However, for long-term holders, entry at near support levels around the 50-day MA provides a better risk-reward balance. Oando remains attractive in the short term, supported by sector strength and strong technical positioning.
• Why are banking stocks trending down?
Despite impressive Q1 earnings and recent price gains, banking stocks are trending down due to a wave of profit-taking, as investors lock in gains from earlier rallies. Additionally, concerns over rising operating costs, regulatory uncertainty, and tight liquidity conditions are prompting a cautious outlook.
While fundamentals remain strong, the current dip reflects short-term sentiment shifts, not a reversal in the sector’s underlying strength, but for long-term investors, this pullback presents a buying opportunity at more attractive valuations.
• Is Ellah Lakes the next Presco?
Ellah Lakes has caught investor attention with its recent market uptick and the strategic appointment of Hewett Benson as CFO, a finance veteran with multi-sector experience spanning capital market, asset management, corporate transformation and finance. This move signals a shift toward stronger corporate governance, improved capital efficiency, and renewed investor confidence.
While still far from Presco’s scale and fundamentals, Ellah Lakes’ positioning in the agribusiness value chain, coupled with leadership upgrades, suggests potential for medium- to long-term growth, especially if it executes well on its expansion and operational goals.
Ellah Lakes offers a high-risk, high-reward proposition. It’s not yet the next Presco, but with a clear turnaround strategy and stronger financial leadership, it has evolved into a formidable sector player. Investors with a growth appetite may consider building a small, speculative position while closely monitoring execution and earnings progression.
• What are the stocks to watch?
The week ahead offers further upside in key stocks and sectors, especially as pre-earnings positioning gains pace.
Key stocks to watch in the coming week are GTCO, Lafarge Wapco, BUA Foods, International Breweries, Wema, CWG, Ellah Lakes, Transcorp, Neimeth, Aradel, LASACO, Univinsure, Total Energies and many others.