At the beginning of the year, we showcased Nigerian stocks investors should buy in this year 2022 as a guide to those seeking both capital appreciation and long term returns in form of dividend yield.
Notwithstanding imminent risks to equity market rally in 2022, we also noted that Nigerian stocks are still attractive and should remain resilient in the year 2022.
No doubt, barely one month after, the market has not proven us wrong as year-to-date (YtD) positive return stayed at +10.18percent as at Monday, February 14, despite recent activities of profit takers.
Some of the stocks we asked investors to watch that were undervalued and presented attractive BUY opportunities for value hunters and how they have performed year-to-date (YtD) are Dangote Cement Plc (+6.9pecent), MTN Nigeria Communications Plc (+1percent), Lafarge Africa Plc (+10.6percent), GTCO Plc (+5.2percent), Nestle Nigeria (-7.8percent), Zenith Bank Plc (+7.2percent), and BUA Cement (+5.5percent).
Others are: United Bank for Africa Plc (+7.5percent), Fidelity Bank Plc (+12.5percent), Access Bank Plc (+10.8percent), Stanbic IBTC Holdings Plc (-2.8percent) and Flour Mills of Nigeria Plc (+3percent).
Some of the companies above are resilient bellwethers with a history of sustaining earnings growth through political cycle.
Others are: Unilever Nigeria Plc (-5.2percent), Okomu Oil Palm Plc (-10percent), Presco Plc (+8.2percent), Vitafoam Plc (+8.4percent), Berger Paints Plc (-2.3percent), Ardova Plc (-2.3percent), SEPLAT Plc (+33.2percent) and Total Energies Marketing Nigeria Plc (+8.6percent).
Also on analysts BUY list for 2022 include Dangote Sugar Refinery Plc which has risen by 0.9percent year-to-date, Guinness Nigeria Plc (+24.5percent), Conoil Plc (+20.5percent), FCMB Group Plc (+0.3percent), May & Baker Plc (+10.7percent), Fidson Healthcare Plc (+30.1percent) and Neimeth International Pharmaceuticals Plc (+3.4percent).
In their February presentation at the Lagos Business School (LBS) Executive Breakfast Session, Financial Derivatives Company noted that interest rates direction and corporate earnings will serve as a major watchdog for investors.
According to the analysts, upward trend in interest rates will trigger sell-offs in equities space, “but investors still expected to rally for capitalised stocks in near term.
They added that the equities market will be stimulated by strategic positioning for attractive dividend yields and impressive corporate earnings performance. Though, they are also of the belief that political uncertainties will make investors tread cautiously.
In their stock recommendation for the week, Afrinvest research analysts said they expect bargain hunting activities to dominate activities “as investors cherry-pick relatively attractive stocks.”
Following negative take-off to this week’s trading, Lagos-based Vetiva analysts in their February 14 note said, “We are likely to see another bearish close due to profit-taking activities, while market trades mixed.”
“This week, we expect to see investors continue to book profits on positions that have appreciated significantly in the past weeks. From the large-cap stocks, we expect the profit-taking to extend to their mid-cap and small-cap outperformers,” Lagos-based United Capital analysts said in their February 14 note.
“That said, with the big banks likely to release their FY-2021 numbers within the next two weeks, we expect investors to begin to take positions in names expected to deliver outperforming numbers while declaring strong dividend payments”, the United Capital analysts added.