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Stocks near 52-week low create bargain opportunity for value investors

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Performance at Nigeria’s equities market has remained mixed on a weekly basis since the start of the year, indicating no definite trend for the market lately.
But with the 52-week low metric, value investors can sniff out bargain opportunities in the market.
When market performance fluctuates, it becomes somewhat challenging to make a good investment decision.
Investors can, however, clamp down on these difficulties by adopting the concept of 52-week low, a technical indicator mostly used by some traders to assess the current valuations of stocks trading at the bourse.
Basically, a 52-week low, otherwise known as one-year low, is the lowest price a stock traded for in the previous year, and the percentage difference from its current price gives the stock’s proximity to the metric. The indicator evaluates a stock’s recent performance and gives an idea of its current valuation.
Since it is the interest of every investor to buy low and sell high so as to book impressive returns later, stocks’ percentage change from their 52-week lows would help ascertain if a stock is undervalued which could signal bargain opportunities.
Some investors are attracted to stocks trading near their 52-week lows and having sound fundamentals, this is because they are often considered fit for position taking with high optimism of a bullish trend in the future.
BusinessDay reviewed stocks of publicly quoted firms on the Nigerian Stock Exchange (NSE) as at the close of trade at Customs street Friday, Feb. 8 and discovered some stocks hit fresh one-year lows last week largely due to their unimpressive financial performance.
While some equities were drifting closer to their lowest prices in the last year, some others remained bullish and far from their 52-week lows despite days to the nation’s general elections.
Academy Press slumped 8.89 percent last Monday to close at 41 kobo on the floor of the NSE, its lowest level in more than 13 years, after the printing and publishing firm released its financial results for the nine months ending December which saw it enmeshed in losses amounting to N178.7 million as against N121.9 million losses recorded in the corresponding period of 2017.
Likewise, Guinea Insurance shed 4.76 percent Thursday to settle at a record low of 20 kobo. This could be likened to weaker investor sentiment over the controversy on the insurer’s suspension by the National Insurance Commission (NAICOM), even though it was later debunked by the underwriting firm.
Morison Industries, which has remained unchanged for almost a year, was 3.77 percent near its 52-week low of 53 kobo, while the Nigerian Aviation Handling Company (NAHCO) was 4.04 percent near its cheapest price in the last one year after the aviation handling company shed 4.01 percent last Friday to close at N3.35 per share.
NAHCO posted an impressive financial performance in the first nine months in 2018, growing revenue from N5.8 billion to N7.25 billion, while post-profit was up 109 percent to N601 million.
Moreso, the downward trend witnessed by Ecobank Transnational Incorporated (ETI), which caused the lender to lose 2.49 percent of its market value to close at N13.70 last week, brought the equity to 4.55 percent near its one-year low of N13.20. Results for the nine months period to September 2018 reveal the bank grew profit by 31 percent to N75.72 billion from N57.95 billion.
Sovereign Trust Insurance, Japaul Oil & Maritime Services and Cornerstone Insurance were all at 5 percent close to their one-year lows.
Although Cornerstone Insurance emerged from losses in the first nine months of 2018 compared to the previous year, it continued to hover around its 52-week low. Sovereign Trust Insurance recorded a decline in profit to N543 million from N668 million, while Japaul Oil & Maritime Services made N885.51 million loss in the review period.
Seplat gained 5.75 percent to close at N560.50 per share last week, putting it at 7.79 percent away from N520, its cheapest price in the last one year.
This is considered too close despite an impressive nine-month period in 2018 which put sales of the Oil & Gas firm on the increase, the company also washed off its garment of losses by recording N27.97 billion profit in the period.
Seplat operates in the upstream sub-sector of the Oil & Gas industry and analysts have attributed its share performance to the dwindling crude oil prices which have impacted negatively on the oil firm’s earnings.
“What I see affecting Seplat is oil prices,” Ayodeji Ebo, Managing Director, Afrinvest Securities Limited, said.
Meanwhile, C & I Leasing was 623 percent away from its one-year low, making it the stock with the biggest change from its one-year low on the Lagos-bourse, thanks to its recent share reconstruction involving cancellation of 1.48 billion ordinary shares of 50 kobo each, leaving 404.25 million ordinary shares of 50 Kobo each as its new total outstanding shares.
This, according to the firm, was to enable it raise additional capital to expand its business and create enough room to accommodate the conversion of the Abraaj loan stock, amounting to $10 million, to equities in the leasing company.

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