Nigerian stocks went bearish for the first time in weeks last week as profit-taking set in, especially in the insurance sector, where equities that had recorded an abrupt price boom, following the announcement of new capital rules for the industry, began to decline.
The NGX Insurance Index shed 8.2 per cent, setting the broader index up for a 0.8 per cent retreat.
“Intermittent profit-taking activities may impact the potential for further gains, as many tickers currently trade at their year highs,” analysts at Meristem Securities had said in their forecast.
“Meanwhile, activity on financial services stocks may remain elevated, as investors anticipate tier-1 banks’ earnings releases, as well as the recent strong interest in insurance tickers due to reforms within the sector,” they added.
Looking ahead, positioning for the earnings release and dividend announcements by big lenders could define the direction of trade this week, with the audited reports of Zenith Bank and GTCO due for publication at any moment from now.
PREMIUM TIMES has assembled some stocks with sound fundamentals, adopting rigorous approaches to save you the risk of picking equities at random for investment.
The pick, a product of an analytical market watch, offers a guide to entering the market and taking strategic positions in hopes that selected stocks will record reasonable price appreciation with time.
This is not a buy, sell or hold recommendation but a stock investment guide. You may need to involve your financial advisor before making investment decisions.
Zenith Bank
Zenith tops this week’s list for trading well below its intrinsic value and for its chances of paying a good dividend for the half-year (HY) 2025 period. The net profit ratio (NPR) of the lender is 32.8 per cent, while the price-to-earnings (PE) ratio is 2.3x. Its relative strength index (RSI) is 60.5.
Living Trust Microfinance Bank
Living Trust makes the selection for trading close to its 52-week low. The micro-lender’s NPR is 18.2 per cent, while its PE ratio is 26.3x. The RSI is 7.5.
Fidelity Bank
Fidelity Bank appears on the pick for trading below its underlying value. The NPR of the lender is 28.9 per cent, while the PE ratio is 2.3x. Its RSI is 52.5.
ALSO READ: Nigerian insurance stocks jump to peak level ever after new industry rules
Transnational Corporation (Transcorp)
Transcorp makes the cut for trading fairly below its intrinsic value. The conglomerate’s NPR is 23.3 per cent, while the PE ratio is 7.4x. Its RSI is 49.6.
Nigerian Aviation Handling Company (NAHCO)
NAHCO makes the cut for its currently sound fundamentals. The ground handling company’s NPR is 27.5 per cent, while the PE ratio is 11.1x. Its RSI is 51.9.
