Welcome to our first Stock Watch post by Rafiki — not just any financial analyst, but our very own Finance LLM. Rafiki is our AI stock market analyst, analyzing the performance of hundreds of stocks on the NGX each week. If the name sounds familiar, you’re right! Just like Rafiki uses his wisdom to advise Simba in Lion King, Rafiki will be here to guide you on the most interesting stocks to keep an eye on and help you make smarter investment decisions.
Each week, Rafiki will be looking at the NGX and keep an eye on the All-Shares Index (ASI). Rafiki will examine the top-performing and underperforming equities, and assessing the key financial drivers influencing market sentiment It doesn’t matter if you’re a seasoned investor or just stepping into the market, Rafiki ensures you’re never in the dark.
So, let’s see what wisdom Rafiki has for us this week — which stocks are ruling the Pride Lands, and which are fighting to survive?
Bullish Momentum: Equities Posting Significant Gains (Feb. 19 – 25)
Honeywell Flour Mills: A Massive 47% Gain
Honeywell Flour Mills stood out as one of the hottest stocks, posting a staggering 47% gain in a single week. The company’s third-quarter results played a major role in this growth, showing a pre-tax profit of ₦12.2 billion, a sharp turnaround from a ₦8.8 billion loss in the same period last year.
- Revenue surged from ₦123 billion to ₦277 billion in nine months.
- Despite ₦8.5 billion in foreign exchange losses, the company’s overall performance showed improvement.
- Investors speculated on recapitalization plans to address its ₦30 billion loan exposure.
Honeywell’s share price skyrocketed 241% over the past year, making it one of the best-performing stocks. However, with a price-to-earnings ratio of 13.6, some analysts believe it is in overvalued territory.
NEM Insurance: 85% 1-Year Return
NEM Insurance continued its strong performance with a 12-month trailing return of 85%. Despite a slight dip in its Q4 profit, the company posted a ₦27 billion full-year profit, up from ₦19 billion in the previous year.
- Insurance revenue reached ₦97.1 billion, nearing its ₦100 billion target.
- With a P/E ratio of 2.8, the stock appears undervalued.
- The stock price has nearly doubled in the past year, climbing from ₦8 to ₦13 per share.
Given these strong numbers, analysts consider NEM Insurance a buy, as it still presents good value despite its recent surge.
VFD Group: Back to Profitability
VFD Group, a multi-sector investment company, saw its stock climb 3.63% during the week, thanks to its return to profitability.
- Gross earnings nearly doubled, from ₦45 billion to ₦83 billion.
- Net revenue jumped from ₦12.19 billion to ₦32 billion.
- The company has a strong shareholder equity of ₦61.9 billion but a moderate debt load of ₦10.5 billion.
Despite these positives, the stock’s P/E ratio of 7.3 raises caution, as it suggests the stock might be slightly overvalued.
Bearish Sentiments: Stocks That Struggled This Week
While many stocks delivered impressive gains, a few underperformed due to weak earnings, debt burdens, or investor skepticism.
UPDC: A Real Estate Stock Facing Pressures
UPDC, a real estate investment company, struggled to maintain momentum, with investors pulling back due to concerns over slow revenue growth and high debt levels.
- The stock saw declining investor interest, leading to a sharp drop in share price.
- Challenges in the real estate sector, including rising borrowing costs, have impacted its valuation.
Dangote Cement (DANGCEM): A Surprising Dip
Despite strong balance sheet fundamentals, Dangote Cement saw a minor price dip as investors took profits from its recent rally.
- Net income: ₦445.21 billion (FY 2023).
- Revenue: ₦2.21 trillion, solidifying its industry dominance.
- Dividend yield: 5.64%—remains an attractive yield play.
Market Outlook: Short-term fluctuations do not alter DANGCEM’s long-term growth trajectory. Investors should strategically time re-entry to capitalize on valuation dips.
Buy, Sell, or Hold? Rafiki’s Recommendations
1. Honeywell Flour Mills Plc (HONYFLOUR)
Current Price: ₦11.25
Market Capitalization: ₦99.13 billion
Price-to-Earnings (P/E) Ratio: 13.25
Net Income: ₦6.23 billion (last quarter)
Revenue: ₦188.31 billion (FY)
Recommendation: Hold
Honeywell Flour Mills has demonstrated significant growth, with a notable increase in net income and a reasonable P/E ratio. However, considering its recent price surge, it may be prudent for current investors to hold their positions and monitor for sustained performance before making additional investments.
2. NEM Insurance Co Plc (NEM)
Current Price: ₦12.60
Market Capitalization: ₦65.72 billion
Dividend Yield: 4.58%
Net Income: ₦13.02 billion (FY)
Revenue: ₦55.69 billion (FY)
Recommendation: Buy
NEM Insurance has shown robust financial health, with a strong net income and a healthy dividend yield. The company’s consistent performance makes it an attractive option for investors seeking exposure in the insurance sector.
3. Dangote Cement Plc (DANGCEM)
Current Price: ₦532.00
Market Capitalization: ₦8.91 trillion
P/E Ratio: 19.6
Net Income: ₦445.21 billion (FY)
Revenue: ₦2.21 trillion (FY)
Dividend Yield: 5.64%
Recommendation: Buy
Dangote Cement remains a dominant player in the industry, showcasing substantial revenue and net income figures. Despite a higher P/E ratio, its strong market position and attractive dividend yield make it a favorable option for investors seeking stable returns.
4. VFD Group Plc (VFDGROUP)
Current Price: ₦52.40
Market Capitalization: ₦66.38 billion
Price-to-Earnings (P/E) Ratio: 8.61
Net Income: ₦7.71 billion (TTM)
Revenue: ₦30.02 billion (TTM)
Recommendation: Buy
VFD Group Plc has demonstrated strong financial performance, with a reasonable P/E ratio and significant net income. The company’s diversified investment portfolio and strategic growth initiatives position it well for future expansion. Investors seeking exposure in a dynamic investment company may find VFD Group an attractive option.
5. UPDC Plc (UPDC)
Current Price: ₦3.10
Market Capitalization: ₦57.54 billion
Price-to-Earnings (P/E) Ratio: 60.7x
Net Income: ₦917.25 million (TTM)
Revenue: ₦11.93 billion (TTM)
Recommendation: Hold
UPDC Plc has shown a significant increase in revenue and a return to profitability. However, the high P/E ratio suggests that the stock may be overvalued at current levels. Investors are advised to monitor the company’s performance for sustained growth before making additional investment decisions.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your research or consult with a financial advisor before making investment decisions. All financial data is sourced from the provided links and is accurate as of the latest available reports. Investors are encouraged to conduct further research and consider their financial objectives before making investment decisions.
