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FCMB Group, Mutual Benefits, UBA top Stocks pick this Week

Nigerian stocks continue to see an uptrend never before seen in the history of the market, mirrored by the main equity index crossing a new high last Wednesday, as local funds continue to drive gains in the absence of foreign inflow.

Shares have returned an incredible 37 per cent in less than a month since the turn of the year.

That said, it seems the run of big gains is not over yet. The earnings season is right here and companies have started turning in their financials fast and furious. Financial results are obviously the new force that will determine how soon the boom will last.

Generally, the fate of the entire market will possibly hang on the performance of bank stocks, notably the Big 5 lenders and their results. Even those of the entire sector, considering key indicators, will likely be reasonably impressive.

It is so because factors like the banks’ uncommonly huge foreign exchange gains and higher borrowing costs, which earned bigger interest income for lenders in the first three quarters last year, are certain to be a major boost for profit.

PREMIUM TIMES has assembled a number of stocks with fundamentals and other potential, adopting key analytical approaches to save you the hassle of randomly picking equities for investment.

The selection, a product of analytical market watch, offers a guide to entering the market and taking strategic positions in hopes that equities will gain value with the passage of time, particularly in the short term.

This is not a buy, sell or hold recommendation but a stock investment guide. You may need to involve your financial advisor before taking investment decisions.

FCMB Group

FCMB Group leads this week’s pick for a couple of metrics that make the stock quite appealing, especially to potential investors seeking value for money.

The lender’s net profit for last year accelerated more than three times to N95.5 billion, according to its unaudited financials released last Friday. Also, the stock is trading significantly below its intrinsic value, meaning it has prospects of appreciating considerably in future.

The price-to-book ratio of the financial services group is 0.5x, while its price-to-earnings (PE) is 2.3x.

Mutual Benefits

Mutual Benefits makes this week’s list for currently trading well below its intrinsic value. The underwriter’s PB ratio is 0.6x, while its PE ratio stands at 3.6x.

United Bank for Africa (UBA)

UBA appears on the list for currently trading significantly below its real value. The lender’s PB ratio is 0.5x, while its EPS is 10.9x.

UACN Plc

UACN makes the list for currently trading significantly below its intrinsic value, meaning it has prospects of appreciating considerably in the short term.

The conglomerate’s PB ratio is 0.9x, while its PE ratio is 8.2x.

Sovereign Trust Insurance

Sovereign Trust Insurance features on this week’s stock selection for presently trading below its actual value.

The food insurer’s PB ratio is 0.6x, while its PE ratio is 8.4x.

Veritas Kapital

Veritas Kapital appears in the pick for trading substantially below its actual value.

Its PB ratio is 0.6x at the moment, while its PE ratio is 4.2x.

University Press Limited (UPL)

UPL appears on the list for currently trading significantly below its intrinsic value.

The company’s PB ratio is 0.5x, while its EPS is 10.9x.

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