Amidst the ravaging bears that has pushed the equities market to a 15-month low on Monday, analysts at Afrinvest West Africa have unveiled some stocks that have upside potential to fetch investors significant capital growth.
The stocks are in the banking, consumer goods and industrial goods sectors.
In the banking sector, for instance, the said United Bank for Africa Plc was identified to have upside potential of 56 per cent and Zenith Bank Plc 52 per cent. GTBank Plc has 27 per cent growth potential, while Access Bank Plc has 11.3 per cent.
In consumer goods sector, the analysts said UAC of Nigeria Plc has upside potential of 122 per cent; Nigerian Breweries Plc has the potential to gain 60 per cent; PZ Cussons Nigeria Plc 48.5 per cent and Flour Mills of Nigeria Plc 29.9 per cent. In the industrial goods sector, Lafarge Africa Plc can rise by 158 per cent and Dangote Cement Plc 28.5 per cent.
According to them, while risk factors remain on the horizon, they are optimistic of an impending bullish streak in the market as equities near trough points.
“We advise investors to be on standby as we perceive the turning point imminent whilst echoing our long term focus on fundamentally sound stocks with attractive entry prices and prospects of, at least, double digit upside potential,” they stressed.
Analysts at Meristem Securities Limited had last week said rather than panic, investors should take advantage of the bear market, noting that the bearish days would be over soon.
“With stock prices bottoming out, light gleams at the end of the tunnel. The low prices in the market provide investment opportunities for players in the market, but of course, with a focus on the fundamentally justified stocks,” they said.
The analysts explained that the 2019 elections have posed a major concern for most investors which has caused them to withdraw their funds from the market, thus making profit volume opportunities after the election become more visible.
“We believe that after the elections in February 2019, calm will be restored in the market. It is only fair that you don’t get caught sleeping so why not you buy now, ahead of 2019?,” they said.
In buying stocks now, the analysts advised investors to consider the fundamentally justified stocks, stressing that “the market always remembers these stocks and given their very attractive prices now, your patience will be rewarded.”
They added that investors should also consider companies which are important to the growth of the economy.
“Consumption is a given and the government will always carry out infrastructural projects and works. Consumer staples and the elephant in the industrial goods sector lead the way here,” they said.
Other stocks investors should consider, according to the analysts, are dividend yielding stocks.
“Dividend yielding stocks always provide an extra income stream for their holders. Even when stock prices are falling and there is no capital appreciation, dividend income provides some comfort. With prices on the low end, dividend yield becomes even more attractive,” they said.