Here’re stocks that beat inflation in YtD returns

…Transcorp, Wema, Dangote Cement, others top league

This year, Nigeria’s equities market has risen by 28.08percent according to stock trading figures as at Monday January, 22. The market which offers world’s best return year-to-date (YtD) is helped by some of the 155 listed companies with returns that surpass inflation.

The National Bureau of Statistics (NBS) inflation report came in with inflation exceeding 18-year high to hit 28.92percent in December, up by 72 basis points (bps) from 28.21percent in November 2023.

Transcorp for instance has risen this year by 110.3percent, Wema Bank (+93.8 percent), Dangote Cement (+85.2 percent), Honeywell Flour Mills (+83.1percent) and Eterna (+81.9percent).

In the banking sector, other stocks that have beaten Nigerian inflation are: FCMB Group (+46.6percent), Jaiz Bank (+60.3percent), Sterling (+62.5percent), and Unity Bank (+103.1percent). The bulls have continued to dominate Nigeria stock market activity this year. The market has seen only one session of negative close this 2024.

The stock market has further defied Monday’s inflation report as investors interest in some equities pushed the benchmark performance index above 95,000 points at the close of trading on Monday while market capitalisation has reached new high of N52.408trillion.

Coronation Research analysts in their January 8 note attributed the optimism in the market to the traditional January rally “as well as investors taking position ahead of earnings release and dividend declarations for the just-concluded year. We expect this rally to continue this month though we may see some corrections further down the line”.

“In January 2024, we expect the Bulls to prevail, as bargain hunting continues as the order of the day. Given the global developments across major central banks in advanced economies, high base expectations for inflation, and improved economic growth prospects, we expect the local bourse to record a positive performance this new week,” said Lagos-based research analysts at United Capital in their January 22 note.

The analysts noted that investors may continue to cherry-pick stocks with strong fundamentals, (value or growth), adding that value stocks may be choice for dividend scouting investors, ahead of full year 2023 earnings season. “At different intervals, we expect mild selloffs, albeit insignificant,” they added.

Other industrial good stocks that have surpassed inflation in their returns this year are: BUA Cement (+53.1percent), and Lafarge Africa (+46percent). For consumer goods, Cadbury has outperformed Nigeria inflation rate with return of 37.4percent. Others are Dangote Sugar (+38.6percent), PZ (+31.1 percent), and Unilever (+46.6 percent). Among Oil & Gas stocks, Conoil has surpassed inflation with return of 33.7percent this year, while Japaul Gold has beaten inflation this year with return of 49.4 percent.

“We anticipate a positive performance in the Nigerian equities market this week underpinned by the expectation of sustained upward momentum in the market.

“Notably, we anticipate continued interest in oil and gas stocks given the recent approval for oil marketers to distribute products from the Dangote refinery,” said according to Meristem research analysts in their January 22 note.

The analysts believe that positive developments in the power sector is poised to spur increased buying activities on related stocks.

However, they acknowledge the potential for profit-taking, especially in stocks that have seen substantial gains, similar to the banking sector’s performance last week.

“In summary, we expect the NGXASI to close in the green zone for the week,” Meristem analysts added.

In the Agriculture sector, FTNCocoa has risen this year by 35.8percent while Presco has increased by 34.2percent. For the conglomerates, John Holt is up by 29.3percent.

Penny stocks in insurance sector are also impressing investors with returns that are beating inflation.

AIICO has increased by 72.5percent, Guinea Insurance (+82.8 percent), Lasaco (+34.2percent), Linkage Assurance (+81.3percent), Mutual Benefits (+50.9percent), Sunu Assurances (+80percent), and Universal Insurance (+84.6percent).

Also, looking at other financial institutions, Abbey has risen this year by 34.7percent, Africa Prudential (+29.7percent), and Veritas (+89.2percent). Construction/ Real Estate companies’ stocks are doing well in returns; Julius Berger is up this year by 34.8percent while UPDC (47.7percent). For healthcare stocks, May & Baker has outperformed others with return of 56.2percent which also beats inflation.

ICT sector has stock like Chams (+51.3percent) which also surpassed inflation. In the services sector, Ikeja Hotel has risen by 32.8percent, NAHCO (+33.9percent), Red Star (+29.2percent), Transcorp Hotels (+42.5percent), and University Press (+50 percent). They have all surpassed inflation in return.