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Buy These 12 Stocks for Christmas

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Not quite as expensive as Five Golden Rings, Three French Hens or Nine Ladies Dancing, but buying these 12 stocks should be a perfect Christmas gift for you or a loved one.

As 2020 blessedly clangs to a close, it’s imperative for investors to know where to put their money next year, and we are also going to be telling the market our top stock picks for 2020.

This year has left an indelible mark in the mind of people and policy makers across the globe as the coronavirus pandemic that has claimed millions of lives disrupted the demand and supply side of the market, tipping many economies into a recession, and causing stock market rout.

While the Nigerian economy contracted for a second time in 5 years, the Nigerian stocks surged the most in five years as traders bought up shares in a hunt for assets with attractive yield.

The Nigerian Stock Exchange (NSE) and (All Share Index) has advanced 44.56 percent in 2020, the best performer in Africa, according to data from Bloomberg Terminal.

The persistent slide in short-term interest rates offered on government treasury bills is pushing traders toward equities; a scenario analysts call the great “rotation.”

A rotation is a situation where money leaves bonds and flows into stocks or vice versa, usually triggered by monetary policies.

Zenith Bank Plc

Consistent growth in earnings and an uptick in electronic banking amid a punitive regulatory environment catapulted the lender to become Nigeria’s largest bank by profit. It has a year to date gain of 31.7 percent and trades at a price multiples of 3.5 times earnings, making its shares very attractive.

Zenith Bank has the highest dividend yield that stood at 11.41 percent, which means investors and shareholders will receive higher returns for taking the risk of investing in the entity.

Dangote Cement Plc

The largest producer of the building material, and the most capitalized firm in Africa’s largest economy surmounted the headwinds brought by the coronavirus pandemic that forced government shutter construction sites by recorded double digit growth in earnings.

It has a year to date of 72.50 percent, beating the NSE ASI Index of 44.56 percent and a dividend yield of 6.16 percent.

Dangote Cement has the financial strength to take advantage of government proposed infrastructure spending and low cement consumption per capita as evidenced in a robust net cash flow balance of N376.60 billion as at September 2020, and a total asset of N1.84 trillion.

The 2021 budget submitted to the National assembly showed that the government plans to spend N3.60 trillion on capital projects, an increase of 45 percent from the revised capital expenditure for 2020 (N2.49 trillion).

The company has announced a share buyback that increased bullish sentiments.

Guaranty Trust Bank

The most capitalized lender in Africa’s largest economy has been leveraging on its state of art technologies and efficient automation process across its branches across the country to reduce cost and bolster return on average equity as it continues to utilize shareholders’ resources in generating higher profit.

It has a year to date return of 10.16 percent, and dividend yield of 8.54 percent while its stock trades at 4.76 times earnings.

Dangote Sugar Plc  

The company benefited from the border closure imposed by the government to curb smuggling as competitors were forced to patronize the consumer goods firm’s product as demand spiked.

The largest producer of the sweetener’s share price closed at N17.90 as at 2:00 pm in Lagos; and it has a year to date return of 31.60 percent

Notably, analysts at United Capital have a year-end target price of N26, equivalent to an upside of 45.20 percent.

Similarly, analysts at Cordros Securities have a target price of N26.36.

Dangote Sugar also has an attractive valuation as it trades at 4.57 times earnings-a good entry point for investors.

Analysts expect an uptick in the price of sugar to magnify the miller’s earnings in 2021.

Flour Mills Nigeria

The largest miller by market capitalization in Africa’s largest economy bucked the negative moods as its earnings surged.

Despite a surge in inflation and foreign exchange illiquidity combined with the coronavirus headwinds, the company delivered a better return on to shareholders than peer rivals as it continues to consolidate on its excellent distribution and marketing strategies.

The company’s revenue spiked by 31.12 percent to N355.10 billion as at September 2020, that compares with Nestle Nigeria’s (+0.66 percent) uptick at the top line, Unilever Nigeria’s reduction of, (-13.36 percent); Cadbury, (-10.78 percent); Nascon Allied, (+4.11 percent), International Breweries, (-1.36 percent).

Conclusions

Guinness Nigeria, FBN Holdings, NASCON Allied Industries, Lafarge Africa, BUA Cement, Seplat and UBA, are also among our top stock picks for next year as investors have confidence in their growth potentials given management and boards of directors strategic plans.

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