INVESTDATA MARCH STOCKS PICK 2017

Every month, Investdata analyses the market to produce its stocks pick report. By analyzing the composite index NSEASI, we look at and review stock recommendations. The general lull and bearish mode of the market in February militated against performance of many February stocks that were in our watch as low confidence and liquidity pulled most prices down. 

If you are already in Zenith Bank, Eterna, Africa Prudential, Ucap and Presco, we advise you HOLD.

The Nigerian stock market’s indices for last week were mixed to closed lower, after briefly breaking down the 25,000 psychological line as investors reacted negatively to earnings reports and economic data released during the period such ast he 2016 GDP which contracted by -1.51%, lower than anticipated,as well as the Purchasing Managers’ Index (PMI), thatfell for the second consecutive month to 44.0 point in February from 52.0 point in December 2016 and 47 point in January. Also, the rising number of jobless Nigerians is alarming at a time when the economy has remained harsh,pushing 3.67mpeople into the labor market, according to data by the National Bureau of Statistics (NBS). These negative economic indices are propelling low confidence, threatening the stock market and the economy at large. 

Meanwhile, the Composite NSE All-Share Index shed 238.29 points to close the week at 25,012.08 points, from an opening figure of 25,250.37 points, representing a 0.94% decline on improved volume of trades as investors ran for safety. The buying volume of total transactions for the week was 39%, while selling position was 61% to reverse the previous weeks up market.  

Aiico

The price action recently reached new lows and reversed to break up above a downtrend resistance line and appears to be finding buying support around the N0.60 level. The shares could be in the process of bottoming out. On that basis, it is worth buying for the medium to long term.

The stock trend and direction is strong on daily and weekly basis trading above ADX of 20.

Looking at the technical indicators, AIICO closed below the upper band by 44.4%. MACD is bullish, while RSI is reading 46.86 relative at oversold region. Two momentum indicators MACD and CCI are signaling buy while RSI and SO are indicating sell.  MFI on weekly time frame is looking down,but on daily time frame just turn up to indicate that funds start entering the stock now.
The weekly buy volume of the total transactions was 83%, while sell position was 17%.

Fundamental factors: Market Capitalisation: N41.58billion; Price Earnings Ratio: 1.46x; and Dividend Yield: 8.33%.
Meanwhile, gross premium is projected to grow by 12% this year and another 18% next year; Earnings is estimated at 21% this year. There is positive sentiment for the stock.

Fidelity Bank

The nation’s financial services sector has remained a major driver of the equities’ markets since the beginning of the year. The price recently reached new lows but we have noticed that a few major banking stocks are not following the market trend. Fidelity Bank recently formed a descending triangle that supports reversal or continuation of trend, it appears to be double bottom within the triangle signaling buying support around the N0.80 to N0.82 level. The shares could be in the process of bottoming out and on that basis is worth buying for the medium to long term with a stop below the lows.

The stock is trading below the shortest moving average and the medium to long term trend is mixed as its attempted rebound has failed but with the expected full-year financials going forward, the stock is likely to breakout the triangle for uptrend. The weekly buy volume of the total transactions was 100%, while sell position was 0%. Also, Friday’s position for buy was 100% and 0% sell volume.
Fundamental factors: Market Capitalisation- N23.76 billion; Price Earnings Ratio- 2.73x; and Dividend Yield, 19.51%. The bank’s quarterly earnings power has been trending up from 12 kobo in Q1 2016 to19 kobo by second quarter, after which it posted a Q3 EPS of 30 kobo with full year earnings projection of 38 kobo and expected dividend of 12koboor more.There is Positive Analysts Sentiment for the stock.

UBA Plc

UBA recently broke up above its downtrend resistance line and appears to be finding buying support around the N4.85 level. The shares could be in the process of forming a double top that could lead to the reversal of the trend within the ascending triangle or a breakout depending on market sentiment as the bank’s financials are expected in the market.  On this basis buying for the medium to long term goals is okay.

UBA is currently trading above its 20 and 50-Day moving average, with trending ability and direction weak as ADX is below 20 at 17.65 and RSI is reading 63.30 which is relative at overbought region.  However watch it, as MFI on weekly time frame is looking up, indicating that funds are entering the stock.
The weekly buy volume of the total transactions was 58%, while sell position was 42%. While as of Friday the buying position was 11% against sell volume of 89%. 

Fundamental factors: Market Capitalisation- N181.76billion; Price Earnings Ratio- 3.48x; and Dividend Yield, 8.18%. But on the strength of its estimated full year EPS of N1.82, dividend possibility of N0.40 and above is high.
Meanwhile, gross earning is projected to grow by 9% in this expected result and another 12% at the end of current financial year; Earnings is estimated to increase 8% for 2016. There is mixed sentiment for the stock.

Forte Oil

Nigeria’s oil and gas industry has also been one of the major drivers of the equities’ market since after members and non-members of the Organisation Petroleum Exporting Countries (OPEC) agreed to cut production output in a bid to stabilize crude oil price in the international market. This has boosted the prices of oil/ Gas stocks in international and local stock market following which earnings are expected to look up. Forte Oil’s price action recently reached new lows but we have noticed that it was in opposite trend of the underlying commodity. It recently broke down the support level of N51.89 to N47 before rebounding. The share price could be in the process of continuing it uptrend and on the strength of this reversal, traders with the very short investment goal should look the way of the stock.

The strength of the current trend and direction is strong on the weekly time frame as ADX is above 20 at 23.70. The weekly buy volume of the total transactions was 100%, while sell position was 0%. FO is trading below its 20 and 50 Day moving average.

Looking at the technical indicators, Forte Oil closed above the lower band by 18.6%. MACD is bullish in the last two trading days,while RSI is reading 30.35. All the momentum indicators are signaling buy, as MFI on weekly time frame is looking up, indicating that funds are entering the stock.
Fundamental factors: Market Capitalisation- N67.09 billion; Price Earnings Ratio 23.36x; and Dividend Yield- Nil%.
Meanwhile, sales revenue is projected to grow by 21% this year and another 18% next year; Earnings is estimated to increase 12% this year. There is Positive Sentiment for the stock.

Total Nigeria

Total Nigeria has performed fantastically well versus the overall market since the beginning of the year. The shares are now breaking above a number of key resistance levels as the buyers appear to be rekindling their interest in the shares. We expect a push towards the N323.14level over the medium term.

The strength of the current trend and direction is strong on the weekly time frame as ADX is above 20 at 30.52.The weekly buy volume of the total transactions was 100%, while sell position was 0%.
Looking at the technical indicators, Total closed above the lower band by 48.6%. MACD is bearish while RSI is reading 55.55. Two momentum indicators SO and CCI are signaling buy, while MACD and RSI are saying sell. MFI on weekly time frame is looking up, indicating that funds are entering the stock.

Fundamental factors: Market Capitalisation- N96.08 billion; Price Earnings Ratio 9.35x; and Dividend Yield:13.18%.
Meanwhile, revenue is projected to grow by 28% this year and another 35% next year; Earnings is estimated to increase at 38% this year. There is a positive sentiment for the stock.