Over N1.4trillion was lost in February as bearish sentiments dominated the Nigerian Bourse. The loss was largely fuelled by the gradual uptick in fixed income yields which continued to attract risk-averse investors.
Following the rout in February, questions are now whether this month of March (which took off on a positive note) will bring any relief for equity investors.
After January’s rally which placed the stock market of Africa’s largest economy as the continent’s best, investors became worse off in February with a record dip of -6.16percent.
INVESTOR collated some investment houses views on the market to help guide your decisions.
Meristem
“While we expect bargain hunting activities and better investor participation in anticipation of dividend announcements, we expect bearish sentiments to have the upper hand, pushing the equities market to another negative close”, according to Meristem research analysts.
Meristem’s ‘Buy’ sentiment is in favour of stocks like ETI, Fidelity, FBN Holdings, Stanbic IBTC, UBA, Zenith, AIICO, Law Union, Linkage Assurance, NEM, Wapic, Nigerian Breweries, Dangote Sugar, Flour Mills, May & Baker, Fidson, and Neimeth.
Other stocks Meristem wants investors to buy are: Chemical and Allied Products, Conoil, and MRS. Meristem also believes that the Target Prices (TP) for these stocks are above their current market prices by at least 10 percent.
Read Also: Nigerias positive Q4 GDP not enough for stocks
GTI
“Despite impressive performance posted by some fundamentally viable companies and high dividend yields, we expect to see further mixed sentiment by investors in the equity amidst rising yield in the Fixed Income market”, according to GTI research analysts in their recent note.
They want investors to buy GTBank, Zenith, Access, UBA, FCMB, Sterling, Union Bank, FBN Holdings and Fidelity Bank.
GTI Research analysts believe that the upside potentials of these stocks over the next 12-months are significantly high when their current prices are compared to the analysts fair values.
Hence, investors may take positions on these stocks. Also, Dangote Sugar, Flour Mills, UACN, United Capital, and Africa Prudential are in the analysts Buy list for this week.
Coronation
“Despite the effect of rising market interest rate yields, there is the likelihood of investors taking positions in dividend-paying stocks as companies like Zenith Bank and MTN Nigeria release their full-year 2020 corporate earnings. However, our overall sense is that interest in the market is weak”, according to analysts at Coronation Research.
“Last week we forewarned our readers that we would make sales among our industrial stocks in order to raise our notional cash position by up to five percentage points, in the event making notional sales to bring the notional cash position up from 13.2percent to 17percent. We made notional sales in MTN Nigeria, Dangote Cement and Airtel Africa (which, frustratingly, is a very illiquid stock at the moment). We intend to continue with these tactics this week with the aim of reaching a notional cash position of 20percent,” the analysts said.
Vetiva
“Void of any significant positive event capable of lifting investors’ sentiment, the All Share Index (ASI) continued its downward slope amid persistent sell pressure. With the anticipation of some corporate earnings hitting the market in the coming week, we expect the market to trade mixed, with a bit of cherry-picking activity in some counters and continued sell pressure driven by the outflow of funds from the equities market to the Fixed Income market”, Vetiva Research analysts said.
Below are stocks Vetiva wants investors to Buy, noting that they consider them highly undervalued, “but with strong fundamentals, and where potential return in excess of or equal to 15percent is expected to be realized between the current price and the analysts’ target price (TP).”
The stocks are GTBank, UBA, Access, FBN Holdings, FCMB, Stanbic, Guinness, Unilever, Flour Mills, Dangote Sugar, Lafarge, Julius Berger, Total and Ardova.
United Capital
Though United Capital Research expects the stock market’s performance to “vibe to the tune of corporates actions”, stocks like GTBank, PZ, Flour Mills, Dangote Sugar and Zenith are in their ‘Buy’ list this week.
