Top Nigerian Stocks to Watch: Complete Investment Analysis

Top Nigerian Stocks to Watch: Complete Investment Analysis

Understanding the basics of investing in the capital market is fundamental to achieving your investment goals. Regardless of one’s experience level and market knowledge, successful trading requires proper analysis. The dynamic between supply and demand is crucial for investors to understand before entering the market, as it ultimately determines stock prices rather than assigned values.

Analysis Methods

Two main approaches to stock analysis:

1. Technical Analysis: Can generate good profits using various technical indicators efficiently
2. Fundamental Analysis: Essential for finding multi-bagger stocks that provide consistent returns year after year

Key considerations in fundamental analysis include:

• Corporate governance
• Management team quality
• Products and services offered
• Earnings quality and dividend payments
• Price movement trends
• Industry position

Top Nigerian Stocks Analysis

1. Zenith Bank

• Q1 earnings growth: 0.6%
• Strong asset quality with 4.3% non-performing loan ratio
• Reduced exposure to high-risk sectors (oil and gas sector: 14.6%)
• Key metrics:
  • CAR: 20%
  • Liquidity: 41.8%
  • Consistent dividend payments (2015-2020)
  • Dividend yield: Above 10%
  • Regular interim and final dividend payments

2. MTN Nigeria (MTNN)

• Market leader in telecommunications sector
• Market share: 38.47%
• Q1 performance:
  • 5.6% bottom-line growth
  • Voice revenue growth: 6.14%
  • Data subscription growth: 59%
• Strategic partnerships (e.g., Netflix)
• Consistent dividend payments

3. United Bank for Africa (UBA)

• Strong presence: Nigeria, Africa, UK, USA, and France
• Q1 2020 performance:
  • Gross earnings: ₦147.2 billion (11.8% YoY growth)
  • Total assets: ₦6.4 trillion (13.4% growth)
  • Shareholders’ funds: ₦612.6 billion (2.46% growth)
  • Profit before tax: ₦32.7 billion (8.5% growth)
  • Profit after tax: ₦30.1 billion (5% growth)
  • Return on equity: 20% (annualized)

4. First Bank of Nigeria (FBNH)

• Target price: ₦8.65
• Q1 2020 results:
  • 47% year-on-year increase in net profit
  • 6% quarter-on-quarter growth
  • Improving non-performing loan levels
  • Dividend: 0.35 kobo

5. Guaranty Trust Bank (GTB)

• Q1 2020 performance:
  • PAT: ₦112.86 billion (1.55% YoY growth)
  • Assets growth: 8%
• Strong capitalization level
• High operational efficiency
• Historical share price peak: ₦60 (2018)
• Current share price: ₦25
• Consistent growth in turnover, PAT, and EPS

6. Access Bank

• Evolution: From local bank to world-class African financial institution
• Current position: Among top 5 Nigerian banks
• Strong management reputation
• Extensive branch network

7. Nestle Nigeria

• Six decades of market presence
• Leading food and beverage company
• Popular brands:
  • Food: Maggi, Golden Morn, Nan, Lactogen, Nutrend, Cerelac
  • Beverages: Milo, Choco Milo, Nescafe, Nestle Pure Life, Nido
• Strong market position with growing population demographic

8. Dangote Cement

• Market leader in Nigerian cement industry
• Highest turnover among cement companies
• Strong dividend history (up to ₦16 per share)
• Strategic government relationships
• Dominant position in construction projects

Disclaimer

This analysis is for informational purposes only. Investors should conduct their own research and consider the risks involved before making investment decisions in the stock market.