Nigerian stocks you can invest in H2’2024 – Investment analysts  

This exceptional performance marks a milestone in NGX’s history, overcoming economic challenges such as high inflation, a depreciating exchange rate, and ongoing security concerns. 

The prevailing optimism led to discernible shifts in purchasing behaviour, resulting in the All-Share Index closing the first half of the year at 100,057.49 index points.  

Additionally, the year-to-date (YTD) return of the NGX All-Share Index showcases its resilience, standing at an impressive 33.81% despite bearish trends observed in the second quarter of the year. 

Demonstrating resilience amidst challenges, the market navigated headwinds such as the Central Bank’s interest rate hike and rising inflation, revealing its underlying strength. 

While the outlook for the second half of 2024 appears promising, caution remains crucial. Investors should prioritize the following strategies: 

Investment analysts’ recommendations:  Investment analysts who spoke to Naijaonpoint said the Banking sector, Oil and gas sector, Agricultural sector, and telecommunications sector are sectors to invest in this second half of the year.  

Below are the recommendations on stocks to invest in H2’2024, according to the investment analysts.  

In an exclusive interview with Nairmetrics, Director at Halo Nigeria Capital Management Limited, Mr. Paul Uzum, demystified the key factors to consider when investing in the Nigerian capital market.  

He identified four pillars guiding investment decisions: return on investment (capital gain), dividend payout, bonus issue, and stability of capital.  

Uzim highlighted that the recapitalization in the banking sector, which involves issuing new shares, will lead to an increase in outstanding shares by 50%-100%.  

These new shares will qualify for the 2024 dividend, resulting in a decline in EPS and a significant drop in dividend per share. 

Uzim emphasized that dividend payout is crucial for pricing stocks in Nigeria due to the high inflation rate.  

He noted that Zenith Bank remains the only banking stock assured to provide investors with at least a 10% dividend yield at the current price, even after issuing new shares.  

He also recommended UBA and Access Bank but advised against purchasing GTCO at the current price of N45, citing a low dividend yield of 7.3%. Instead, he suggested waiting to buy GTCO at N37 post-capital raise. 

“Due to the high inflation rate in Nigeria, dividend payout is the most crucial factor in pricing stocks. Zenith Bank is the only banking stock that is guaranteed to provide investors with at least a 10% dividend yield at the current price, even after issuing new shares. 

“Due to the high inflation rate in Nigeria, dividend payout is the most crucial factor in pricing stocks. Zenith Bank is the only banking stock that is guaranteed to provide investors with at least a 10% dividend yield at the current price, even after issuing new shares. 

After Zenith, I recommend UBA and Access. I do not advise investors to buy GTCO at the current price of N45 because the current dividend yield is 7.3%, which is quite low for the industry. However, if you are patient, you may be able to buy GTCO at N37 after the capital raise,” he said. 

Investors are encouraged to closely monitor the forthcoming FBNH rights issue, as Femi Otedola and Oba Otudeko vie for control of the bank.  

This rights issue will determine the bank’s future leadership, and there are opportunities for profit from trading the rights. 

Uzim believes the stock will see significant movement post-rights issue due to Otedola’s involvement. 

“Investors should keep a close watch for the upcoming FBNH rights issue. As Femi Otedola and Oba Otudeko scramble for control of the bank, this rights issue will determine who gains total control.  

There is potential to profit from trading the rights, and I believe the stock will move significantly after the rights issue due to the presence of Femi Otedola,” he said. 

Beyond the banking sector, Uzim recommended Total, Okomu Oil, and Presco for their strong performance and benefits from the economic policy reforms of Tinubu’s government.  

He also advised investors to anticipate MTN reporting significant losses when the H1 2024 numbers are published at the end of July.  

Investors can take advantage of this by buying MTN stock at around N180 as the market reacts negatively to the results. A similar strategy is recommended for Nestle, expected to make substantial losses, with a buying opportunity below N800. 

Managing Director / CEO. Arthur Stevens Asset Mgt Limited and former CIS President Mr.Tunde Amolegbe  speculated that the focus for the second half of the year will be on banking recapitalization, with more banks expected to launch public offerings of shares to existing and prospective shareholders.  

He mentioned that Zenith Bank, GTBank, Access Bank, and FCMB are likely preparing for this move. 

Beyond banking, Amolegbe highlighted sectors or companies with significant foreign exchange revenues, such as agriculture and oil and gas, as likely outperformers.  

He also noted the potential for growth in the telecom sector, driven by possible price realignments. 

“Aside from banking obviously sectors or companies with significant fx revenues such as agriculture and oil and gas are likely to outperform  

I also feel like the telecom sector still has significant room for growth given the potential for price realignments,” he said. 

In particular, Amolegbe expressed personal interest in TotalEnergies, Presco, MTN, and Seplat due to their strong growth prospects. 

David Adonri of Highcap advised investors to focus on the banking industry, petroleum, and agriculture sectors.  

He stated that all listed banks are good stocks to buy following the recapitalization exercise. 

 In the petroleum sector, he picked Total Energies Plc, and in the agricultural sector, he recommended Okomu Oil Plc and Presco Plc. 

Group Managing Director of Crane Securities Limited, Mr. Mike Eze stressing the importance of understanding individual investment goals, cautioned against solely chasing high-priced equities.  

 Eze further differentiated strategies for capital gains and income-oriented investors.  

Eze listed stocks like Zenith Bank, Fidelity Bank, Access Bank, MTNN Plc, Total Energies Plc, Seplat Energies Plc, Okumo, and Presco as good stocks to buy at the beginning of the second half of the year 2024.  

According to him, the reason is that the stocks are still very attractive and still have the propensity to go higher in price which will enable investors to have a good capital gain.  

Investing inherently carries risks, and it is essential to carefully consider these risks before making any decisions.