In a recent note to investors, Lagos-based Vetiva research analysts put together their ten (10) preferred stock picks for 2021, which they believe provide the highest upside potentials in 2021.
The ten high convincing stocks are GTBank Plc, Access Bank Plc, Zenith Bank Plc, FCMB Plc, Dangote Sugar Refinery Plc, Flour Mills Nigeria Plc, Lafarge Africa Plc, Seplat Petroleum Development Company Plc, Ardova Plc, and Total Nigeria Plc.
These stocks are considered highly undervalued but have strong fundamentals. They have a potential return in excess of or equal to 15percent expected to be realized between their current price and the analysts’ target price.
Interestingly, looking at the ten (10) preferred stocks by Vetiva research, Ardova Plc has the highest upside potential of 126percent based on the analysts Target Price (TP) of N30.69; followed by Access Bank Plc which has an upside potential of 63percent amid the analysts target price of N13.77.
BusinessDay had advised investors to BUY stocks in the oil and gas sector following cheering news in the crude oil market.
Also on the BUY list is Seplat Petroleum Development Company Plc which has an upside potential of 58 percent is expected to high N636.92, according to Vetiva analysts. BusinessDay had identified some of these stocks as several analysts picks for the year 2021.
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Vetiva said its selection criteria combine intrinsic valuation upsides to potential dividend yields while limiting downside risks. Their picks cut across four key sectors: Banking, Consumer Goods, Industrials and Oil & Gas.
Here are the 10 “high conviction stocks” Vetiva research analysts said they believe have sound fundamentals and provide superior risk-adjusted returns over the next 12 months. Though, the high conviction stocks are reviewed quarterly, according to the analysts.
Other high conviction stocks listed with their target prices (TPs) and upside potentials are: GTBank with a target price of N42.19, representing an upside potential of 30percent; Zenith Bank’s target price of N33.22 represents an upside of 34percent; Lafarge Africa Plc’s analysts’ target price of N30.45 implies an upside of 45percent; while FCMB’s target price of N4.31 means upside potential of 29percent.
Dangote Sugar Refinery with analysts set a target price of N20.72 means the stock will go up by 18percent; Flour Mills’ N31.35 target price implies it will appreciate by 21 percent; while Total Nigeria with a target price of N175.06 will increase by 35 percent, according to the analysts’ recent data.
Vetiva in its Nigerian equity strategy titled “10 High Conviction Stocks for 2021”, it noted that amid a resurgence of BUY sentiment and record trading activity, the Nigerian equity market, much like capital markets around the world felt largely disconnected from the realities of the deadly pandemic ravaging the global economic landscape in 2020.
“In truth, however, market performance was simply responding to a global expansionary monetary wave coordinated by apex banks to manage the crisis. In Nigeria, investors whose wealth had suddenly taken a beating due to currency depreciation looked to recoup their losses by scavenging oversold but fundamentally sound stocks in the equity market.
“The buying momentum was further supported by declining yields in a Fixed Income market that was losing its attractiveness by the day. Accordingly, the equity market rewarded investors with a 50percent trading return at the end of the year”, the analysts stated.
“While we do not expect 2021 to play out in exactly the same manner, we note that the support factors for equities remain strong, as still-low Fixed Income yields are supported by rising crude prices and an expected uptick in business activity”, Vetiva said.
