BUA Cement, Unilever, Jaiz Bank top stock pick this week

Floor of the Nigerian Stock Exchange Market

Nigerian stocks shed 2.1 per cent last week on account of sector-wide profit-taking activities, led by industrial goods and oil & gas stocks.

That left the year-to-date yield of the market at 59.9 per cent. The decline happened amidst a sharp decline in transaction volume, which plunged by 62.9 per cent to 2.9 billion shares from 7.6 billion shares a week ago.

“We expect investors to favour stocks with strong earnings prospects, attractive dividend yields and sound fundamentals, while monitoring developments in the fixed-income market. Lower yields could further improve the relative appeal of equities,” analysts at investment bank United Capital said ahead of the week.

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, with the expectation that selected stocks will record reasonable price appreciation with the passage of time.

This is not a buy, sell or hold recommendation but a stock investment guide. You may need to involve your financial advisor before taking investment decisions.

BUA Cement tops this week’s pick on the basis of its sound fundamentals. The cement maker’s net profit ratio (NPR) is 33.8 per cent, while the price-to-earnings (P/E) ratio is 19.1x. Its 14-day relative strength index (RSI) is 56.1.

Unilever Nigeria makes the selection by virtue of its robust fundamentals. The conglomerate’s NPR is 14.1 per cent, while the P/E ratio is 17.6x. Its 14-day RSI is 63.4.

Jaiz makes the cut by reason of its strong fundamentals. The NPR of the non-interest bank is 28.3 per cent, while the P/E ratio is 11.2x. Its 14-day RSI is 44.3.

Cornerstone Insurance makes the list on account of its sound fundamentals and for trading below its intrinsic value. The underwriter’s NPR is 31.2 per cent, while the P/E ratio is 4.8x. Its 14-day RSI is 37.7.

AIICO Insurance appears on the pick because of its strong fundamentals and for trading below its intrinsic value. The NPR of the insurer is 8.9, while the P/E ratio is 5.6. The 14-day RSI is 50.7.