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Low priced stocks yield highest returns in 2007
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Investors who chose to buy low priced stocks at the Nigerian Stock Exchange (NSE) last year were ably rewarded as they ended the year with capital appreciation of between 200 and 3,000 percent.
A report by analysts at the research department of First Securities Discount House (FSDH), showed that stocks which started the year below N1.00 ended up yielding between 1,000 and 3,000 percent gains. Hitherto they were considered as penny stocks and were mostly ignored by investors.
However, investors who had a rethink last year and decided to put their money in these companies, some of which started the year below par value of N0.50 could not have regretted making such decisions.
For instance, Afroil plc and Capital Oil plc started the year at a low of N0.34 each but were able to return 3,152.94 percent and 1,494.12 percent gains respectively. Specifically, Afroil closed the year at N11.06, showing a capital appreciation of N10.72 as investors bought 170.668 million shares during the period under review. Similarly, investors who bought Capital Oil were N5.08 richer even as the report indicated that a total of 163.947 million of the company’s shares were traded during the year.
National Salt Company plc (NASCON), was second on the top performers table with capital appreciation of N16.36 having moved from a low of N0.69 to N17.05, with investors trading 862.368 million shares.
NASCON slipped into the red few years ago leaving its numerous shareholders in a state of despair. While some of the shareholders were able to move out in good time others were not so lucky as they watched the share price dip to as low as N0.69.
As part of the resuscitation efforts, the company acquired Dangote Salt Limited in January 2007 while the synergy inherent in the acquisition prompted demand for the shares and pushed the share price to N17.10. Indeed the development has finally thrown NASCON back into the black as un-audited result for the half year showed profit after tax of N516 million as against a loss of N4 million in 2006.
Costain Nigeria plc which concluded a public offer recently rose from N1.46 to N18.89 showing total return of N17.43 or 1,193.84 percent. The company, which has recorded tremendous improvements in its operations, offered 178.2 million ordinary shares of 50 kobo each at N13 per share.
With the funds, the company should be in a good position to further invest in plant and equipment, furniture and joinery division, transportation, business acquisition and working capital, to be able to confidently compete and be a major player in the Nigerian construction industry and beyond.
Other stocks which started the year below par value but ended up posting significant returns include IPWA plc, from N0.33 to N4.00 or 1,112.12 percent; Grommac Industry plc, from N0.38 to N3.61 indicating capital appreciation of 850 percent and African Paints which moved from N0.38 to N3.49 posting total return of N818.42 percent.
Also on the top 10 list are Chellarams plc which moved from N1.59 at the beginning of the year to N12.36, posting a gain of N10.77 or 757.14 percent; followed by Cutix with total return of 606.93 percent.
On the down side, Transnational Corporation of Nigeria (Transcorp) plc was the poorest performing stock in 2007 with minus 6.57 returns on investment.
According to analysts at FSDH research group, Transcorp started the year at a high of N9.71 per share but closed the year at a low of N3.14, showing a capital depreciation of N6.57 or 67.66 percent. Those who bought the shares in 2007 went home with a total of 4.116 million shares.
However, investors who had a rethink last year and decided to put their money in these companies, some of which started the year below par value of N0.50 could not have regretted making such decisions.
For instance, Afroil plc and Capital Oil plc started the year at a low of N0.34 each but were able to return 3,152.94 percent and 1,494.12 percent gains respectively. Specifically, Afroil closed the year at N11.06, showing a capital appreciation of N10.72 as investors bought 170.668 million shares during the period under review. Similarly, investors who bought Capital Oil were N5.08 richer even as the report indicated that a total of 163.947 million of the company’s shares were traded during the year.
National Salt Company plc (NASCON), was second on the top performers table with capital appreciation of N16.36 having moved from a low of N0.69 to N17.05, with investors trading 862.368 million shares.
NASCON slipped into the red few years ago leaving its numerous shareholders in a state of despair. While some of the shareholders were able to move out in good time others were not so lucky as they watched the share price dip to as low as N0.69.
As part of the resuscitation efforts, the company acquired Dangote Salt Limited in January 2007 while the synergy inherent in the acquisition prompted demand for the shares and pushed the share price to N17.10. Indeed the development has finally thrown NASCON back into the black as un-audited result for the half year showed profit after tax of N516 million as against a loss of N4 million in 2006.
Costain Nigeria plc which concluded a public offer recently rose from N1.46 to N18.89 showing total return of N17.43 or 1,193.84 percent. The company, which has recorded tremendous improvements in its operations, offered 178.2 million ordinary shares of 50 kobo each at N13 per share.
With the funds, the company should be in a good position to further invest in plant and equipment, furniture and joinery division, transportation, business acquisition and working capital, to be able to confidently compete and be a major player in the Nigerian construction industry and beyond.
Other stocks which started the year below par value but ended up posting significant returns include IPWA plc, from N0.33 to N4.00 or 1,112.12 percent; Grommac Industry plc, from N0.38 to N3.61 indicating capital appreciation of 850 percent and African Paints which moved from N0.38 to N3.49 posting total return of N818.42 percent.
Also on the top 10 list are Chellarams plc which moved from N1.59 at the beginning of the year to N12.36, posting a gain of N10.77 or 757.14 percent; followed by Cutix with total return of 606.93 percent.
On the down side, Transnational Corporation of Nigeria (Transcorp) plc was the poorest performing stock in 2007 with minus 6.57 returns on investment.
According to analysts at FSDH research group, Transcorp started the year at a high of N9.71 per share but closed the year at a low of N3.14, showing a capital depreciation of N6.57 or 67.66 percent. Those who bought the shares in 2007 went home with a total of 4.116 million shares.
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