Nigerian stocks continue to exhibit remarkable resilience, with equities recording a cumulative positive yield over the weeks following the central bank’s decision to increase the benchmark interest rate in May.
This increase, which typically would attract investors towards fixed-income assets offering better returns, has not deterred market activity.
Currently, market activity is at its strongest in years, with trade volumes averaging 2.2 billion shares weekly over the past four weeks. This uptick suggests the long period of depressed trading that followed the COVID-19 pandemic has ended.
This week, the equity market is poised for heightened activity beyond secondary market trades, as Access Holdings, Nigeria’s biggest lender, initiates its rights issue, offering 17.8 billion shares.
Top Stock Picks:
1. Linkage Assurance
Linkage Assurance leads this week’s picks, buoyed by a 1 for 10 bonus declaration for the full year 2023 and its current trade significantly below intrinsic value. The underwriter’s price-to-book (PB) ratio stands at 0.6x, and its price-to-earnings (PE) ratio is 3.5x.
2. Zenith Bank
Zenith Bank is featured for trading below its real value. The lender’s PB ratio is 0.4x, and its PE ratio is 1.4x.
3. Ikeja Hotel
Ikeja Hotel is highlighted for its potential strong price appreciation, trading significantly below its actual value with a PB ratio of 0.6x and a PE ratio of 2.7x.
4. UAC of Nigeria Plc (UACN)
UACN makes the list for its significant undervaluation, with a PB ratio of 0.8x and a PE ratio of 2.8x.
5. Julius Berger
Julius Berger is included for trading below its current real value, reflected in a PB ratio of 0.96x and a PE ratio of 6.9x.
6. NPF Microfinance Bank
NPF Microfinance Bank rounds out the list, trading below its intrinsic value with a PB ratio of 0.9x and a PE ratio of 6x.
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