New sectors and stocks in the capital market are joining the league of high returning equities, as recent market analyses show that the packaging, construction, insurance and pharmaceuticals have turned bullish, with massive yield to date, to join the likes of Foods, Beverages, Conglomerate and Cement sectors.
A study by ARM Economic Research shows that as at March 5, 2013, the packaging sector recorded year-to-date (YtD) increase of 22.29 percent and a 52 week YtD of 67.04 percent, suggesting that segment of the economy is upbeat.
Investment analysts attributed the bullish returns in the packaging sector to the optimism in the stocks, which have December as their year end.
Sunday Adebola, managing director, BGL Securities, said most stocks in that sector, including Avon Crown Cap have been doing well with investors expecting another impressive result in their 2012 results. There is also the belief in the market that the low float in the sector is responsible for the trend. Low float means that the shares of the companies in the sectors are not available for trading and by the law of demand and supply, their prices rise due to inadequate supply.
Investors are also harvesting robust returns from stocks in the construction sector, according to the study, as the sector records 35 percent YtD less than three months into the year, and return of 64.26 percent in one year.
The increased demand for Building/ construction stocks like Julius Berger, Cappa and D’Alberto, Roads Nigeria and International Paints, West Africa ( IPWA) is traced to the growth in infrastructure development, in line with government policy in that sector of the economy. IPWA, for example, recorded 52 week YtD of 78.00 percent, a development that is attributed to the impressive performance of the stock, following huge demand for its product, paint.
The pharmaceutical sector, one of the revelations in the market, staged a strong rebound . Another report by Meristem Securities Limited showed that Evans Medical, Fidson and May and Baker are the main drivers. Evans Medical surged with 98.85 percent 52 weeks YtD return and YtD of 1.73 percent as at March 5, 2013. May and Baker recorded 52 week YtD of 60.65 percent and YtD of 2.49 less than three months into 2013. Fidson, another pharmaceutical stock was also bullish with one year 55.68 percent YtD and 1.65 percent return growth, two months into the year.
Adebola believes Evans Medical and Fidson are undervalued, following huge demand for their range of products and the impressive returns they have recorded. Fidson for example, with its recent expansion, turned in impressive nine month results which showed a transition from loss to profitability.
The Meristem study also showed Wema Bank as the wonder of the equities market, with 52 week YtD of 144.23 percent . Analysts attribute this to rumour of plan rights issue and new investor interest.
The insurance sector which has until recently demonstrated a bearish trend, has joined the list of high returning stocks with YtD return of 13.52 percent and 52 weeks return record of 17.28 percent.
GODFREY OBIOMA
