Analysts see banks, telecoms leading H2 market gains

Zenith Bank, Guaranty Trust Holding Company (GTCO), United Bank for Africa (UBA), MTN Nigeria, and Seplat Energy are among the Nigerian companies investors should own in the second half of 2026, according to CardinalStone Research, which says the country’s equity market still has significant upside despite a strong rally in the first six months of the year.

In its 2026 Mid-Year Asset Allocation Guide, the Lagos-based investment firm identified 15 listed companies across banking, telecommunications, industrials, consumer goods, and energy as its preferred investment picks, arguing that improving macroeconomic conditions, resilient corporate earnings and continued foreign investor interest will support another leg of the market’s advance.

CardinalStone forecasts the Nigerian stock market will deliver a 24.9 percent return in the second half of 2026, driven by moderating inflation, exchange rate stability, stronger corporate profitability, and the potential re-inclusion of Nigeria into the FTSE Russell Frontier Market Index.

The firm’s conviction comes after Nigerian equities returned 47.4 percent in the first half of the year, making the NGX one of the world’s strongest-performing equity markets despite bouts of profit-taking in May and June.

Banks dominate investment recommendations

Financial stocks account for nearly half of CardinalStone’s recommended portfolio, reflecting expectations that banks will continue benefiting from high interest rates and increased government borrowing.

The investment firm is bullish on Zenith Bank, GTCO, UBA, Access Holdings, FCMB, and Fidelity Bank, saying the sector’s earnings outlook remains favourable as lenders continue to earn robust interest income from government securities.

According to the report, the Central Bank of Nigeria is unlikely to cut interest rates before year-end because of renewed inflation concerns and election-related fiscal risks. That means yields on Treasury bills and bonds are expected to remain elevated, allowing banks to sustain strong net interest margins.

CardinalStone also believes the industry’s 2025 recapitalisation exercise and balance sheet restructuring have strengthened banks’ ability to sustain earnings growth and dividend payments.

“Overall, we believe the 2025 balance sheet clean-up and recapitalisation have strengthened banks’ capacity to deliver meaningful returns and shareholder dividends,” the report noted.

Among the banks under coverage, Access Holdings offers the highest projected upside of 113.7 percent, followed by UBA (49.3 percent), Zenith Bank (42.5 percent), Fidelity Bank (31.8 percent), FCMB (50.3 percent), and GTCO (26.1 percent) over the next 12 months.

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MTN, Airtel to ride data boom

Outside the banking sector, CardinalStone expects telecommunications companies to remain among the biggest beneficiaries of Nigeria’s digital economy expansion.

The research house said sustained growth in data consumption, rising average revenue per user (ARPU), and continued network investments should support revenue growth for both MTN Nigeria and Airtel Africa despite persistent energy cost pressures.

It added that dividend expectations are likely to remain a key catalyst for investor demand in both stocks during the second half of the year.

MTN Nigeria is projected to deliver nearly 30 percent upside based on CardinalStone’s valuation estimates.

Seplat remains preferred energy play

CardinalStone is equally optimistic about Nigeria’s upstream oil producers, particularly Seplat Energy, citing stronger crude production, improving operating conditions, and sustained oil prices.

The report noted that geopolitical tensions in the Middle East are likely to keep crude prices above pre-conflict levels, while higher domestic production should support earnings for indigenous producers.

Seplat, alongside Aradel Holdings, is expected to unlock additional shareholder value through recent acquisitions and increased capital expenditure. Analysts places a 44.8 percent upside on Seplat shares over the next year.

Consumer companies return to favour

The investment house also expects the consumer goods sector to continue recovering as companies benefit from easing foreign exchange pressures and tighter cost management.

However, unlike previous years when price increases drove earnings, analysts believe future revenue growth will increasingly depend on higher sales volumes as Nigerian consumers become more price-sensitive.

Within the sector, the firm is particularly positive on UACN, following its acquisition of CHI Limited, which it says significantly expands the company’s packaged food business and strengthens medium-term earnings prospects.

Guinness Nigeria, Nigerian Breweries and Unilever Nigeria also feature among its preferred stocks because of their improving operating efficiency and stronger brand positioning.

Cement producers to benefit from infrastructure spending

CardinalStone expects Nigeria’s record N32.3 trillion capital expenditure budget to provide fresh momentum for cement manufacturers.

The firm believes infrastructure spending and capacity expansion projects will support volume growth for Dangote Cement, BUA Cement and Lafarge Africa (WAPCO), although elevated energy costs remain a downside risk.

Among its listed recommendations, Lafarge Africa carries an estimated 14 percent upside.

Dangote Refinery’s listing could transform the market

Beyond individual stocks, CardinalStone believes the planned listing of Dangote Petroleum Refinery will become the defining event for Nigeria’s capital market this year.

Valued at about $39.1 billion, the refinery could account for roughly 35 percent of the Nigerian Exchange’s market capitalisation, attracting significant institutional participation and improving Nigeria’s chances of regaining inclusion in major frontier market indices.

Analysts say the listing, together with improving macroeconomic fundamentals, should encourage renewed foreign portfolio investment into Nigerian equities.