These Nigerian stocks outperformed market in 11 months

As many equity investors continue to look for strong clues with which to begin 2022, it is worthy to note that despite the bumpy rides in year 2021, some stocks far outperformed the market in the eleven months to November 30.

For instance, many of the stocks tracked by INVESTOR recorded impressive returns in excess of 50percent in the review eleven months period.

Some of them include: Champion Breweries Plc (+196.5percent), FBN Holdings Plc (+67.1percent), Guinness Nigeria Plc (+91.1percent), Honeywell Flour Mills Plc (+229.2percent), AXA Mansard Plc (+101.9percent), and Morison Plc (+270.6percent).

Others stocks with over 50percent returns are: NAHCO Plc (+56.5percent), Okomu Oil Palm Plc (+56percent), Seplat Energy Plc (+72.8percent), TotalEnergy Plc (+66.8percent), United Capital Plc (+104.9percent), University Press Plc (+129.7percent), and Vitafoam Plc (+180.8percent).

Investors who bought these stocks at the beginning of year 2021 and decided to hold them till the review eleventh month have reasons to smile over the huge gains which outperformed that of the entire market at +7.39percent same period.

“In Nigeria, the foremost commodity-export by FX earnings, oil revenue has witnessed a 34percent surge year-to-date, signaling stronger FX reserves and positively impacting sentiment around the federal government capacity to honour its debt obligations. For the equity market, this means investors are willing to be less risk-averse in mopping up equities,” Lagos-based Vetiva research analysts said in their recent note.

The analysts noted in their 2022 Outlook titled “Running scared” that in the third quarter (Q3) of the year, “we saw equity returns fall in Kenya, South Africa, and Egypt, while they rose in Nigeria and Ghana respectively. While markets across the region remain in the green YtD, we maintain a conservative outlook on the markets across, given the range of risks and headwinds around economic growth in region”.

The analysts said, “Our conviction stocks have outperformed the NGX ASI, returning 21percent so far this year, largely driven by positive sentiment in the oil and gas sector, specifically, SEPLAT and TOTAL, which have gained 73percent and 67percent ytd respectively, leading the sector to a 54percent ytd close”. Their “high conviction stocks” are those that they believe have sound fundamentals and provide superior risk-adjusted returns over the next 12 months.

Aside the stocks that returned in excess of 50percent in eleven months to November 30, some others that outperformed the Nigeria Exchange Limited (NGX) benchmark performance indicator, though below 50 percent are: Access Bank Plc (+12.4percent), Airtel Africa Plc (+11.5percent), Berger Paints Plc (+16.3percent), Industrial and Medical Gases (formerly BOC Gases) (+9.7percent), Conoil Plc (+6.7percent), Custodian Investment Plc (+32.5percent), Cutix Plc (+22.2percent), Dangote Cement Plc (+14.3percent), Eterna Plc (+18.6percent), and ETI Plc (+39.2percent).

Read also: Market gains N276bn as investors buy MTNN, other stocks

Coronation Research analysts in their recent weekly update said that “At the beginning of each year, we devise a Model Equity Portfolio, consisting of stocks we think will outperform the index. We then spend the rest of the year changing it. We change our views and publish our intended changes in the Nigeria Weekly Update ahead of implementing them in a notional way, with notional trades to alter what is a hypothetical portfolio. This has led to reasonable outperformance by the Model Equity Portfolio of the NGX All-Share Index this year”.

The share price of Fidson Healthcare Plc increased by 37.8percent in eleven months ended November 30 while that of Flour Mills Plc grew by 12.5percent. Others are: Julius Berger (+39.3percent), Learn Africa (+25percent), Livestock Feeds (+46.8percent), May & Baker (+27.9percent), MTNN (+11.8percent), Northern Nigeria Flour Mills (+18.7percent), Oando (+29.7percent), Presco (+23.7percent), PZ (+12.3percent), Royal Exchange (+107.7percent), Transcorp Hotels (+9.8percent), Transcorp (+7.8percent), UACN (+37.9percent), Lafarge Africa (+18.1percent), CHI Plc (+56.3percent), Wapic (+25percent), and Wema (+14.5percent).

The analysts went further saying: “What if we had simply stuck with our original choices this year? The answer is that we would have performed a little worse than the market as a whole (and earned the contempt of those who think that equity investing should be passive).