- Stocks to watch
The stock market last week was down for five straight days amidst sell-offs and buy interests by smart investors. The All Share Index dropped by 2.63% week to date, largely due to the fall in the share price of MTN as it commenced its public offer pegged at N169. The stock eventually closed on Friday at N167 on the secondary market.
As the year is coming to an end, it is of necessity for investors to realign and balance their portfolios. Profit taking is also expected by investors whose investment target has been attained. At that, share prices will of necessity come down, giving another entry opportunity to discerning investors.
Commenting on the market performance, the MD/CEO of Global View Capital Limited, Aruna Kebira stated thus:
“Most prices came down especially because of sell- offs that has been in the market for almost three weeks now. Most prices are trading below their fair value. For instance, MTN that is doing public offer closed at N167 on Friday; Access Bank closed at N8.90, First Bank closed at N11.75. I think there will be upward movement for the market, going forward. More so, the portfolio Managers will want to close the month high. Secondly, people will be taking position ahead of Q4 earnings. Again, the economy whether it’s on paper or not is recovering. We have seen growth in GDP, we have seen moderating inflation rate. The price of Global Crude Oil is about $71 when the bench mark is $40. So things are actually looking up. What we saw in the market in the first week of December will not hold December to ransom. I believe that December will close positively”.
Mallam Garba Kurfi, MD/CEO of APT Securities and Funds Limited also projected a positive outlook for the month of December. According to him the major reason for the down trend last week was due to the fall in the share price of MTN.
The capital market guru stated thus:
“One of the major reason the market was down last week was the drop in price of MTN. When the elephant falls, the forest will feel the impact. When you say index moves positively, it is because Airtel and MTN moved positively. Dangote Cement has not changed its price since September.
Dangote Cement is going to commence their share buyback. If there is buy back, their share price will move upward and this will shake the All Share Index. If you remember, Dangote Cement did share-buy at the last month of year 2020. The Company is repeating share buyback same period this year. Therefore it will affect the index positively.
MTN public offer is closing by 14 December. Once the public offer is closed, I see MTN going up. People want to take advantage of the market, now when they see it, go down it only confuse them. Because the offer is N169 and it is trading around N167; you get confused. So people may be contemplating, should they buy from the offer or from the market.
I expect December to be positive because many of the private institution will do realignment, many portfolio will do rebalancing. The end of the year is likely to close positive”.
Stocks to Watch
Based on the recommendations by capital market gurus, Mallam Garba Kurfi and Mr Aruna Kebira, the following stocks should be watched:
- Zenith Bank and GTCO: These stocks will pay their final dividend in April 2022. Each of them already paid 30 kobo interim dividend. We are expecting the same N2.70 they paid the previous year. If you multiply N2.70 by 10, it will give you N27; and none of them is currently trading at N27. Their dividend yield should give double digit.
- Access Bank is a good buy at N8.90
- MTN is a good buy at N167
- NAHCO: The business of Aviation keeps rising, hence we cannot overlook the stock.
- Cement Industry: BUA Cement, Lafarge and Dangote Cement are selling. Their turnover and profit after tax have all increased. BUA Cement is available at N67.05, even when it is showing 74 on the board
- Okomu is available at N128 even when it is doing N142 on the ticker.
- Fidelity Bank has a fantastic Q3 result. It is trading below N2.50. It is a good buy.