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2017 in Perspective: 8 Stocks to BUY and HOLD in 2017....

Proshare

Saturday, December 31, 2016 10.20 pm / TheAnalyst 

At the close of year 2015, we published about 25 stocks not to buy in year 2016 due to falling fundamentals of these stocks. At the close of trading for the year 2016, out of these stocks, no single gainer, three were delisted, two closed flat while all others closed in red for the year. In 2017, budget implementation, high and growing inflation rate, the weak currency, low government revenue, illiquidity in FX market and tightening monetary policies, weak fiscal policies to stimulate growth would dictate economic outlook, which would trickle down to performance of quoted companies and market at large.

 

In the last 3 years, the trading sentiments on Nigerian bourse remain bearish to post 34.97% loss, with 3yrs average loss of 13.66%- this shows sustained low risk appetite towards investment in equities, which could be traced to gradual decline in economic growth and other bearish microeconomic fundamentals.

 

In 2016, we observed a slight decline in sell-down momentum amid sustained bearish sentiments while investors displayed modest accumulation and opportunistic trading tendency - this was largely driven by cheap valuation of stocks in key active sectors, particularly towards blue chips and big capped stocks.

 

The pace of economic recovery from recession and budget performance would dictate trading pattern in the coming year as analysis had already revealed economic-driven trading pattern in the last two quarters of year 2016.

 

Having said this, selecting stocks ahead of 2017 requires more due diligence as the impacting factors that drove bearish run in 2016 are largely unresolved and still remained overwhelming.

 

According to analysis stated in our article Santa Clause Rally, Stocks on Radar as December effects drive prices, some investors had already repositioned portfolios for dividends and bonuses that would come up in Q1'17.

 

Nevertheless, subsequent paragraphs would highlight 9 stocks to buy and hold in the year 2017. These stocks are picked based on 4yrs performance, meaning these stocks have long term prospect for long term investors. 

 

We also consider 1yr returns of these stocks as this suggests that investors are still considering these stocks, which further indicates sustained investors’ confidence and positive sentiments.

 



NASCON

Business Fundamentals

NASCON deals in salt refining and distribution. The Company is fully into the processing of raw salt- producing both edible and industrial salt. NASCON also produces seasoning, tomato paste and vegetable oil and other food-related products. The product lines and revenue stream include Salt, Seasoning, Tomato, Vegetable Oil and Freight income. All products come in different retail packs and sizes The Company sells its products directly to distributors who targets small wholesalers, confectioners, supermarkets and retailers. The Company provides freight services to all its customers by transporting purchased products to their respective destinations

 

Financials

Despite challenging business environment, the company grew its turnover by 26% while its PAT improved by 9% to close at 1.8billion against 1.6billion recorded in the previous year.

 

Investors' Sentiments

The stock maintained price recovery pattern throughout 2016, after an active sell-down experienced in 2015, driven by huge loss recorded in 2015 financial year. it maintained trade range of N5.75 and N8,77 in the year. We expect the stock sustain price recovery in the year 2017 as price had already broken the trend line above N7.00, aiming the key resistance at N9.08kobo.



Dividend History

The company is among top companies that are consistent in dividend paying in last five financial years, which suggests healthy free cash-flow.

 

Beta Glass Plc

Business Fundamentals

Beta Glass Plc is into manufacturing and selling of glassware. it manufactures, distributes and sells glass bottles and containers for the soft drinks, wine and spirit, pharmaceutical and cosmetics companies across the country. The Company exports to over 13 countries, including Angola, Benin, Burkina Faso, Cameroun, Gabon, Gambia, Ghana, Guinea, Liberia, Mauritius, Rwanda, Sierra Leone and Togo. The Company is a subsidiary of Frigoglass Industries Nigeria Limited.

 

Financials

Despite challenging business environment, the company grew its turnover by 16% while its PAT improved by 81% to close at 2.9billion against 1.6billion recorded in the previous year.

 

Investors' Sentiments

The stock experienced active price correction from historical high of N53.45 to N30.05 in the year 2016. The sell sentiment is waning while the stock is building support at N30.32. we do not expect the stock to trade below N30.32.



Dividend History

The company is among top companies that are consistent in dividend paying in last five financial years.

 

CUSTODYINS

Business Fundamentals

Custodian and Allied Plc is a Nigeria-based investment holding company. The Company holds interests in life and non-life insurance, pension fund administration, trusteeship and property holding companies. Its segments include Non-life business, Life business, Pension administration, and Trustees and others. The Non-life business segment offers a range of insurance products, such as engineering, aviation, marine liability, motor liability, oil and energy, and fire and property for both personal and corporate customers. The Life business segment offers a range of life insurance products on both individual and group basis, including annuity, endowment and investment oriented products, and insurance products with discretionary participatory features (DPF). The Pension administration segment includes the administration and management of the retirement benefits of members. The Trustees and others segment includes trustee management, corporate services, investment and property management

 

Financials

Despite challenging business environment, the company grew its gross premium by 33% while its PAT improved by 8% to close at 4.1billion against 3.8billion recorded in the previous year.

 

Investors' Sentiments

The stock maintained strong uptrend pattern, consolidating within N3.6 and N4.00 throughout the year 2016 for new high. The stock maintained trade range of N4.30 and N3.60 since 2014.




Dividend History

The company is among top companies that are consistent in dividend paying in last four financial years.

 

FO

Business Fundamentals

Forte Oil Plc is an Energy company, engaged in power generation and marketing of petroleum products, which is divided into fuels, production of chemicals, lubricants, greases and power generation. The Company's segments include fuels, which is responsible for the sale and distribution of petroleum products (white products) and Aviation Turbine Kerosene in retail outlets and to industrial customers; production chemicals. The company manufactures and sells production chemicals; lubricants and greases, which manufactures and sells lubricants and greases. It procures and markets Premium Motor Spirit, Automotive Gas Oil (Diesel), Dual Purpose Kerosene, Fuel Oils and Jet A-1 aviation fuel. It manages specialty businesses in aviation, lubricants, chemicals, Liquefied Petroleum Gas and bitumen. The Company sources chemical products, classed under industrial, organic and petro-chemicals, which it sells to local industries. It operates in Nigeria and Ghana.

 

Financials

The company grew its turnover by 32% but its PAT declined by 35% due to challenging business environment to close at 2.8billion against 4.3billion recorded in the previous year.

 

Investors' Sentiments

 

The stock maintained strong uptrend pattern in the recent years but experienced active price correction in the year 2016 from its historical high of N342 to N51.16, due to weak earnings profile and weak cash flow observed its financial. Market has fairly re-priced the stock accordingly. The stock had established a new support at N51.16 for a price recovery mission.



Dividend History

The company is among top companies that are consistent in dividend paying in last Three financial years.

 

Mobil

Business Fundamentals

Mobil Oil Nigeria plc is a Nigeria-based petroleum products marketer. The Company has two segments: Petroleum Products Marketing and Property Business. The Petroleum Products Marketing segment generates revenue from the sale of white products and lubricants. The Property Business segment generates income from the rent paid on its investment properties leased out. The Company's petroleum products include petrol, diesel, aviation fuel, kerosene and lubricants. The Company operates a Lube Oil Blending Plant (LOBP), which has a capacity of approximately 450,000 barrels. It owns over three plants that manufacture lubes, petroleum jelly and insecticide.

 

Financials

Despite challenging business environment, the company grew its turnover by 59% and its PAT improved by 57% to close at 5.7billion against 3.7billion recorded in the previous year.

 

Investors' Sentiments

The stock maintained strong uptrend pattern in the year to hit historical high at N340.32. The stock has consistent growth pattern, indicating strong investors loyalty.  The sentiments appeared mixed towards short-term on the back of modest profit-taking



Dividend History and Consistency

The company is among top companies that are consistent with dividend paying in the last 6 financial years.

 

7Up

Business Fundamentals

Seven-Up Bottling Company Plc is a Nigeria-based company active in the beverages industry. The Company is engaged in the business of bottling and marketing of soft drinks. Its portfolio of brands includes Pepsi, 7UP, Mirinda, Teem and Mountain Dew,  Aquafina table water, which are produced in nine manufacturing plants. The products are marketed through a network of over 200 distribution centres in Nigeria. Seven-Up Bottling Company Plc has operational bases also in Tanzania and Ghana

 

Most Recent Financial Update

The company grew its turnover by 19% but declared Loss of Tax of N1.6billion as bottom-line declined by 186% when compared with N1.8billion profit recorded in the previous year. Though, the company recorded improved cash-flow posture but the surge in cost of sales due to challenging business environment impacted bottom-line significantly.

 

Investors' Sentiments

The stock maintained strong uptrend pattern in the recent years to hit historical high at N197.00. The stock experienced price correction throughout the year 2016. It has established new support at N128.The stock is consolidating for fresh rally in near term all things been equal as strong investors’ loyalty was observed.



Dividend History and Consistency

The company is among top companies that are consistent with dividend paying in last 7 financial years.

 

PRESCO

Business Fundamentals

Presco Plc is an agro industrial company, engaged in the development of oil palm plantations, palm oil milling, palm kernel processing and vegetable oil refining. It specializes in the cultivation of oil palms and in the extraction, refining and fractioning of crude palm oil into vegetable oil and palm stearin.

Product lines include refined bleached and deodorized palm oil; palm olein; palm stearin; palm fatty acid distillate; palm kernel oil, crude and refined, and palm kernel cake.

It owns oil palm plantations, a palm oil mill and palm kernel crushing plant, vegetable oil refining and fractionation plants. The Company consists of oil palm plantations of approximately 16,470 hectares( approximately 11,590 are mature). The Palm oil mill has capacity of over 60 tons fresh fruit bunches/hour; a refinery/fractionation plant has capacity of over 100 tons/day, and the palm kernel crushing plant has capacity of 60 million tons/day.

 

Most Recent Financial Update
Despite the challenging business environment, the company grew its turnover by 48% and PAT improved by 98% to close at N6.8billion against N3.4billion recorded in the previous year. Improved and Healthy cash-flow was observed in the recent earnings report.

 

Investors' Sentiments
The stock maintained strong uptrend pattern in the recent years. The stock experienced modest price volatility in the year 2016. it has established new support around N24.The stock has strong investors loyalty.



Dividend History and Consistency
The company is among top companies that are consistent with dividend paying in last 8 financial years.

 

Total

Business Fundamentals

Total Nigeria Plc is engaged in the blending of lubricants,  sales and marketing of refined petroleum products. The Company's segments include sales to service stations; sales to corporate customers, sales to customers in the aviation industry. It is focused on the sales channels for the Company's products, including petroleum products, lubricants and others. The Company has a distribution network of over 500 service stations across the nation and offers a range of energy products and services. It also has approximately 20 customer service centres, various industrial outlets, over five depots, distribution plants and warehouses across the Western, Northern and Eastern territories in Nigeria. The Company is a subsidiary of Total Raffinage Marketing, which operates petroleum marketing and distribution business in Nigeria.

 

Most Recent Financial Update

Despite the challenging business environment, the company grew its turnover by 38% and PAT improved by 320% to close at N11.6billion against N2.8billion recorded in the previous year. Improved and Healthy cash-flow was observed in the recent earnings report.

 

Investors' Sentiments

The stock maintained strong uptrend pattern in the year. The stock experienced modest price volatility amid impressive price appreciation in the year 2016. it has established new support around N180.The stock has strong investors loyalty.



Dividend History and Consistency

The company is among top companies that are consistent with dividend paying in last 6 financial years.

 

RECALL: Stocks not to buy in 2016

 

 

 



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