Stocks Beat Inflation, Deliver Positive Returns to Investors

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Goddy Egene

As investors bemoan the impact of the rising inflation on their investments, some stocks have given investors positive returns at the stock market. The National Bureau of Statistics (NBS) last week released macroeconomic data for the month of July, showing an inflation rate of 17.1 per cent.

This implies that for investors to record positive returns on their investments, such returns must be above the inflation rate. And considering the state of economy, most investments would give negative returns.

However, THISDAY checks on Monday showed despite the high inflation rate, some investors in stock market have recorded positive returns that are above the inflation level.

For instance, investors in Dangote Flour Mills Plc are enjoying a return of over 218 per cent as the stock has recorded a capital appreciation of about 236 per cent between January and last Monday. E-Tranzact Plc fetched investors over 80 per cent after discounting inflation, while United Capital Plc boasts of 58 per cent. Total Nigeria Plc recorded a return of 47 per cent, just as Seplat Petroleum Development Company Plc and Guaranty Trust Bank Plc posted 38 percent and 37 per cent respectively.

Other stocks that have put smiles on the faces of investors are: A.G Leventis Plc (45 per cent); Union Dicon Salt Plc (39 per cent); Presco Plc (37 per cent); Eterna Plc (34 per cent); Neimeth International Pharmaceuticals Plc (33 per cent); DN Meyer Plc (30 per cent); United Bank for Africa Plc (28 per cent) and International Breweries Plc (24 per cent).

Apart from capital appreciation, investors in equities also receive cash dividends and bonus shares when companies record profitability. Although the market has been volatile in the past two years, stakeholders are bullish on the market.
According to the stakeholders, the low level of prices of stock offers a very good entry opportunity for investors to reap good returns in the very near future, saying that many of the companies are adopting strategies that have started impacting positively on their performance.

Dangote Flour Mills Plc, which has recorded a significant capital appreciation this year, returned to profitability recently.
The company posted a profit before tax (PBT) of N2.64 billion for the nine months ended June 30, 2016, compared to a loss of N9.55 billion posted in the corresponding period of 2015.

Chairman of Dangote Flour Mills, Mr. Asue Ighodalo, said: “Since the take -over, we have taken a lot steps to reposition the company through expansion to drive growth. We are also using this medium to restate our commitment to increasing our shareholders value and our dear customers. Our processes and management have been strengthened in order to stabilise the business and place it on a sustainable path aimed at creating value for its stakeholders.”