Investing in the Nigerian Stock Market – Sectors and Stocks to Watch in 2009

Website design By BotEap.comThink back to the year Nigerians made obscene gains in the stock market. It’s 2008. The same year rated as the worst year investors have ever had. The power of greed was so great that it pushed stock prices beyond their true values.

Website design By BotEap.comThose who are knowledgeable and experienced reap the maximum benefits and exit the market. Others who were moved by the herd effect were not so lucky. They were stranded when prices collapsed. It was a painful experience for speculators. Statistics reveal that investors have lost close to 3.9 billion naira.

Website design By BotEap.comNow, the share prices in the Nigerian stock market look very attractive, but investors are very afraid to risk putting fresh funds into the market. The emotion of fear is really reigning now. Smart investors know that this is the right time to buy low and buy big. But, on what premise would you base your investment drive this time?

Website design By BotEap.comThere is widespread concern about the global recession, the freezing of margin facilities by banks, the devaluation of the naira and the general slowdown in the economy. What criteria should you use to choose stocks in these difficult times as a forward-thinking investor?

Website design By BotEap.comThat is the question I want to answer in this article.

Website design By BotEap.comFactors to consider

Website design By BotEap.com1. Historical stability

Website design By BotEap.comCompanies with a track record of profitable performance over the years, barring unforeseen circumstances, will continue to improve best practices to make investors happy. Remember that First Bank some time ago took the risk of investing in the emerging communications market in Nigeria through ILL. That deal fell through, but the bank did not fail as a result. Years later, it continued to post favorable results, paying investors bond issues and dividends. Currently, this stock is the delight of investors. The first bank has been consistent over the years and has a strong reserve base.

Website design By BotEap.com2. Competitive advantage

Website design By BotEap.comCompanies that outperform in the market over their competitors have a good chance of surviving this difficult time. Strong brands like Cadbury and UACN will continue to make waves in the market. Its products have permanently registered in the minds of consumers in Nigeria. These products will continue to be sold. They are even restructuring and introducing new products that consumers have been buying. The more people use these products, the greater the profitability with good management of human and material resources.

Website design By BotEap.com3. Solid financial foundation

Website design By BotEap.comCompanies that have been accumulating reserves over the years from the profits made have something to fall back on in this bear season to finance projects that will add value to their markets and give investors a good return. UBA and GTB are financial powerhouses for the construction of reserves. The strong reserve base is largely responsible for its expansion into foreign markets. You can see pure gold here. When those foreign branches start to turn a profit, what do you think investors will enjoy? Good timing and high ROI of course, especially on the return of the bulls.

Website design By BotEap.com4. Highly profitable

Website design By BotEap.comNot all companies have the ability to manage resources well for maximum benefit. The fiscal management of certain institutions is so deficient that it deeply reduces their profit margin. In the banking industry, Oceanic Bank stands out in terms of prudent fiscal portfolio management. Making a profit is not all that matters. Having enough to keep is the skill investors love.

Website design By BotEap.com5. Very underrated

Website design By BotEap.comStocks that are undervalued are the first to bounce in a bull market. You are not going to make a profit on the return of the bulls. Your profit margin is decided at the time of your investment. Taking the risk of investing when the company is undervalued guarantees high returns when the market recovers. Unity Bank currently enjoys an agricultural facility on loan terms from the World Bank. At a current market price of less than 3 naira, the shares are severely undervalued

Website design By BotEap.comWinning attitude for predictable profits

Website design By BotEap.com* Continue to be fully invested

* Invest in fundamentally sound stocks

* Ignore the economic forecast and be determined to excel in any economy. The stock market is always an outperformer in the long run and is the only solution to inflation when it comes to your money.

* Continue to acquire more financial and investment skills.

* Be less emotional in your decisions

Website design By BotEap.comSectors and actions to take into account

Website design By BotEap.com1. Agriculture

Website design By BotEap.comThis sector is on the rise as one of the major contributors to Nigeria’s gross domestic product and earnings. New frontiers in cocoa farming and processing are yielding positive results. Listed companies, for example, cocoa processor FTN, Livestock Feeds and Okomu Oil offer good prospects.

Website design By BotEap.com2. Food and drinks

Website design By BotEap.comEven in a recession, people will still demand food and their sweets. The logic of why this sector will work is simple. As long as man lives, the demand for food and drink will continue. Coupled with good management, companies in this sector such as Dangote Sugar, Tantalizer, Flour Mills and Honey Well will continue to delight investors by paying dividends.

Website design By BotEap.com3. Banking

Website design By BotEap.comNigerian banks are currently aggressive in their drive to expand into Africa and beyond. Revenues and profits will soon start to show up on the balance sheet. Some banks, such as First Bank, UBA, GTB, Zenith and Bank PHB, have performed well and will continue to reward investors as bears reign.

Website design By BotEap.com4. Communications

Website design By BotEap.comNigeria’s communications sector is one of the fastest growing in the world. Despite all the infrastructure challenges, companies operating in this sector have made obscene profits and investors will benefit most from their operations in 2009. Starcom is the only stock listed in this sector so far on the US stock market. Nigeria. Investing in it now will not be a bad idea.

Website design By BotEap.com5. Conglomerates

Website design By BotEap.comHistory is in favor of this sector. In particular, they have the ability to restructure and reshape their businesses in difficult times. A stock like the UACN will continue to delight investors

Website design By BotEap.com6. Transportation

Website design By BotEap.comTalk about monopoly. ABC transporte is the only listed company in this sector on the stock market. It has been constant in paying dividends since it was listed in 2006.

Website design By BotEap.com7. Safe

Website design By BotEap.comThe insurance industry is currently enjoying goodwill and patronage as investors continue to position themselves for long-term profit. Companies like International Energy Insurance and Cornerstone are very attractive.

Website design By BotEap.comLearn how to commit the majority of your available fund to the food and beverage sector to minimize your risk. Thinking long term is a surefire strategy that will ensure your success in 2009 and beyond.

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