Despite a scaling-back of expectations on a number of listed companies’ earnings, the shares of Guaranty Trust Bank Plc, Access Bank Plc, UBA, Zenith Bank, Cadbury and Dangote Cement are among some of analysts’ picks for year 2017.
Also found in the basket of most analysts’ stock picks are Flour Mills of Nigeria Plc, Nigerian Breweries Plc, Oando Plc, and FCMB Group Plc.
With investors still suffering from a negative 6.17 percent equity market return or N603.68billion value loss in 2016, many stock buyers are eagerly searching for investment clues on some value stocks to place their money on this year.
Guaranty Trust Bank Plc, resilient in the tier-one banking space, repeatedly occurred in some analysts’ stock picks.
Kayode Tinuoye, head research, financials, United Capital Plc, opined that GTBank’s strong long dollar position should be earnings-positive for the tier-one bank.
Research analysts at Capital Bancorp Plc favoured Dangote Cement Plc in their top stock picks for 2017. The top-line numbers of Dangote Cement Plc in its nine months ended September 30, 2016 came in strong, though the bottom-line was negatively affected by higher costs.
“New pricing and complete elimination of Low Pour Fuel Oil (LPFO) is set to boost Dangote Cement Plc margins. Its stock appears to be trading at a rich valuation”, said Dunn Loren Merrifield research analysts.
“Although the management of Dangote Cement Plc effected a significant price hike of around 39 percent for the Nigerian cement market in late August, the combination of slower sales growth in the three month ending September (relative to the months preceding the price review) and significantly higher fuel costs more than offset the effect of the upward review in prices,” according to FBNQuest’s Tunde Abidoye.
Access Bank is another value stock for investors in 2017 which analysts believe its good asset quality and strong non-interest revenue will support the bank’s earnings, making its valuation also attractive. Access Bank shares gained 41kobo this year, from year open price of N5.87 to N6.28.
Access Bank group’s financial highlights in the nine months period to September 30 2016 show Gross Earnings of N274.468billion from N257.590billion in the nine months period of 2015, an increase of 7 percent.
Profit Before Tax (PBT) increased by 19 percent to N72 billion from N60.4 billion; while Profit After Tax (PAT) also rose by 19 percent to N57 billion from N48 billion.
Zenith International Bank Plc is another value stock for investors in 2017. Zenith Bank shares gained 2kobo into this year, from N14.75 to N14.77.
Zenith Bank’s nine months results came in strong with profit after tax growing by 151 percent to N83billion in the nine months ended September.
Another top pick stock is Nigerian Breweries Plc. “Nigerian Breweries defensive attribute and foray into new low tier beer market should support top-line growth, despite foreign exchange challenges and pressured consumer wallets”, United Capital analysts said. Nigerian Breweries Plc lost N5.99 in the first trading week of 2017, from N147.99 to N142
United Bank for Africa Plc (UBA) is also another pick for analysts who say that the bank’s well diversified operations across Africa give it a competitive edge and dilute the headwinds in any particular market.
Dangote Sugar is another preferred stock for investors. “ The company is a big player in the market and controls significant market share. The tight foreign exchange situation in neighbouring countries opened the market in those countries to the company. Earnings growth for the company is tight but better than that of other consumer goods companies. The company is a market leader and therefore, a price maker” said analysts at Cordros capital.
Analysts at Cordros Capital are also recommending Cadbury Plc.
“We think Cadbury is presently under-priced, given that their fundamentals are good. The management is always working on branding, formulation and it has a discount to Nestle’s products. We expect that the market will shift away from Nestle to Cadbury, given the challenged disposable income of Nigerians. Moreover, the company has introduced new products such as the Trident sugar-free chewing gum”
United Capital also made the list of stocks that can make investors money this year.
“High dividend payout which we expect to be sustained makes the stock an investor’s delight” said analysts at Planet capital.
Developments in the global oil market, liquidity level in the foreign exchange markets, and realignments in fiscal and monetary policies will dictate trading pattern and performance of Nigerian stock market in 2017. – Businessday.