The Nigerian Exchange (NGX) closed lower last week, snapping weeks of bullish momentum as profit-taking dragged equities—particularly in the insurance sector—into negative territory.
Insurance stocks, which had rallied sharply following the announcement of new capitalisation rules for the industry, saw a reversal as investors booked gains. The NGX Insurance Index fell 8.2%, driving the broader market down 0.8% for the week.
“Intermittent profit-taking activities may impact the potential for further gains, as many tickers are currently trading at their year highs,” analysts at Meristem Securities noted. They added that activity in financial services counters is likely to remain strong, supported by expectations of tier-1 banks’ half-year earnings and sustained investor interest in insurance stocks.
Equities to Watch
Zenith Bank
Zenith leads this week’s picks, trading well below its intrinsic value with prospects of a strong half-year dividend. The lender’s net profit ratio (NPR) is 32.8%, price-to-earnings (P/E) ratio at 2.3x, and a relative strength index (RSI) of 60.5.
Living Trust Microfinance Bank
Living Trust makes the list for trading near its 52-week low. The micro-lender posts an NPR of 18.2%, P/E ratio of 26.3x, and an RSI of 7.5, suggesting it is oversold.
Fidelity Bank
Fidelity appears attractive for trading below its underlying value. It records an NPR of 28.9%, a P/E ratio of 2.3x, and an RSI of 52.5.
Transnational Corporation (Transcorp)
Transcorp qualifies on the strength of trading slightly below intrinsic value, with an NPR of 23.3%, P/E ratio of 7.4x, and RSI of 49.6.
Nigerian Aviation Handling Company (NAHCO)
NAHCO rounds out the picks on account of solid fundamentals. The company’s NPR stands at 27.5%, its P/E ratio at 11.1x, with an RSI of 51.9.
