• Friday, March 29, 2024
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Value stocks’ new lows offer opportunities for bargain hunters

Investors to price in corporate actions, earnings guidance as H1 season kicks-off

Stocks like Guinness Nigeria Plc (-59.2percent), International Breweries Plc (- 58.7percent ) , Glaxosmithkline Consumer Nigeria Plc (-51percent), Nigerian Breweries Plc (- 46.2percent) helped fuel the negative returns seen this year at the Nigerian Stock Exchange (NSE). As at Friday, October 11, they have witnessed in excess of 40percent negative return, INVESTOR checks show.

Other stocks that have underperformed remarkably this year are Forte Oil Plc (-44.3percent), Neimeth Plc (-48.7percent), Presco Plc (- 40percent), PZ Cussons Nigeria Plc (-47.9percent), UAC Property Development Company Plc (-41.9percent), Unity Bank Plc (-41.1percent), University Press Plc (-47.2percent), and Champion Breweries Plc (-47.7percent).

Though the negative sentiment around some of these stocks persists because there are still no major catalysts, especially policies by the nation’s economic managers that can boost investor confidence, long-term investors stand to benefit from the longterm growth that they offers.

As a result investors with longterm investment horizon should begin to take position in some of these stocks at their current prices, which market watchers believe offer significant upside potentials.

Stocks that recorded negative returns of over 20 percent this year are: CAP Plc (-26.7percent), Cement Company of Northern Nigeria Plc (-21.6percent), Conoil Plc (- 33.8percent), Dangote Cement Plc (-24percent), Dangote Sugar Refinery Plc (-33.1percent), Eterna Plc (-33percent), and FBN Holdings Plc (-32.1percent).

Read also: Stanbic, Lafarge, MTNN, other stocks spur market’s N20bn loss

While stocks record new lows, the prices of most of the value counters among them offer opportunities for bargain hunting, according to analysts.

“With most bellwether stocks hitting new lows, we expect to see bargain hunting in some of the fundamentally sound stocks”, according to equity research analysts at Lagos-based Vetiva.

Fidson Healthcare (- 27.3percent) has also failed to impress investors, having recorded negative return of over 20percent this year. Also included are, Flour Mill Nigeria Plc (-36.1percent), Gtbank Plc (-22.2percent), Honeywell Nigeria Plc (- 22.7percent), Ikeja Hotel Plc (- 22.9percent), Law Union (-26.7percent), Linkage Assurance (-29.2percent), Mobil Oil Nigeria Plc (- 20.3percent), MRS Plc (- 34percent), and NAHCO Plc (-36.2percent).

NPF Microfinance Bank has lost 27.9percent of its value this year. Others in that category include Oando Plc (-28.6percent), Okomu Oil Palm Plc (- 27.9percent), Rtbriscoe (- 34.2percent ) , Stanbic IBTC Holdings Plc (- 22.7percent), Thomas Wyatt Nigeria Plc (-91.1percent), Total Nigeria Plc (- 39.3percent ) , Transcorp Plc (- 23.5percent), UACN (- 26.7percent), UBA Plc (- 23.4percent), United Capital ( – 2 4 . 5 p e rc e nt ) , Unilever (-27.8percent), and Zenith Bank (-22.1percent) have all lost over 20percent of their year- open values.

Stock market had recorded negat i v e return of about 15.58percent as at trading week ended Friday October 11. The market however opened this week with all sectors closing higher except the Banking sector which declined marginally (-0.03percent).

While it is expected investors are still on the lookout for third quarter ( Q3) 2019 earnings, research analysts believe this mood could cause some positive reactions in the market as investors position in stocks with sound fundamentals.

The negatives seen year- to date come despite remarkable capital appreciation seen in stocks like Dangote Flourmills Plc (+224.1percent), C&I Leasing Plc (+310.1percent), MTNN Plc (+ 44.4percent), Union Bank Plc (+ 25percent), Chams Plc (+30percent) and Lafarge Africa Plc (+28.5percent).