WEEKLY STOCK PICKS: AIICO, FCMB & Fidson Shine as Undervalued Stocks Amid MPC Watch
Nigerian equities closed last week on a positive note, advancing 0.9% as renewed interest in the consumer goods sector lifted the market. The benchmark index has now delivered an impressive 37.8% gain so far this year, cementing investor optimism.
But this week could prove pivotal. Analysts are eyeing the two-day monetary policy committee (MPC) meeting, where Nigeria’s first interest rate cut in years may be announced—a move that could reshape trading momentum in the short term.
Meristem Securities, in its market note, cautioned that “sell pressure on tickers trading at their year-highs may persist intermittently, as price discovery evolves.”
Against this backdrop, Premium Times compiled a list of top stock picks based on value and fundamentals:
This Week’s Top Picks
• AIICO Insurance
• Trading below intrinsic value
• NPR: 6.3% | P/E: 10.6x | RSI: 56.2
• FCMB Group
• Attractive entry point below fair value
• NPR: 8.1% | P/E: 4.6x | RSI: 44.3
• Fidson Healthcare
• Strong healthcare play with room for growth
• NPR: 9.4% | P/E: 9.6x | RSI: 44.5
• Aradel Holdings
• Oil & gas stock with exceptional profitability
• NPR: 66.7% | P/E: 8.6x | RSI: 4.3
• Vitafoam
• Consumer goods giant with healthy balance sheet
• NPR: 13.5% | P/E: 7.9x | RSI: 37.4
Takeaway
This list is not a buy, sell, or hold recommendation but a strategic guide for investors seeking undervalued opportunities. With the MPC meeting outcome pending, price moves may be sharp, making timing crucial.
Key Indicators Explained
1️⃣ Net Profit Ratio (NPR)
• What it is: Shows how much profit a company makes from its revenue.
• Think of it like this: If you sell ₦100 worth of goods and keep ₦10 as pure profit after paying all costs, your NPR = 10%.
• Why it matters: The higher the ratio, the more efficient the company is at turning sales into actual profit.
2️⃣ Price-to-Earnings Ratio (P/E)
• What it is: Compares the stock’s market price to the company’s earnings.
• Formula: Stock Price ÷ Earnings per Share.
• Think of it like this: If a company makes ₦1 per share and the stock trades at ₦10, the P/E = 10.
• Why it matters:
• Low P/E (like FCMB at 4.6x): Stock may be undervalued (cheap relative to earnings).
• High P/E: Could mean investors expect strong future growth or the stock is overpriced.
3️⃣ Relative Strength Index (RSI)
• What it is: A momentum indicator that measures whether a stock is overbought or oversold.
• Scale: 0 to 100.
• Interpretation:
• Above 70: Overbought → stock may be expensive, risk of pullback.
• Below 30: Oversold → stock may be too cheap, potential rebound.
• Between 40–60: Neutral zone (healthy).
Putting It Together
Let’s apply it to one example:
• FCMB Group
• NPR 8.1% → profitable.
• P/E 4.6x → cheap compared to earnings.
• RSI 44.3 → trading at a fair level, not overbought or oversold.
✅ This combo suggests FCMB could be an undervalued opportunity if fundamentals hold.
Nigerian equities closed last week on a positive note, advancing 0.9% as renewed interest in the consumer goods sector lifted the market. The benchmark index has now delivered an impressive 37.8% gain so far this year, cementing investor optimism.
But this week could prove pivotal. Analysts are eyeing the two-day monetary policy committee (MPC) meeting, where Nigeria’s first interest rate cut in years may be announced—a move that could reshape trading momentum in the short term.
Meristem Securities, in its market note, cautioned that “sell pressure on tickers trading at their year-highs may persist intermittently, as price discovery evolves.”
Against this backdrop, Premium Times compiled a list of top stock picks based on value and fundamentals:
This Week’s Top Picks
• AIICO Insurance
• Trading below intrinsic value
• NPR: 6.3% | P/E: 10.6x | RSI: 56.2
• FCMB Group
• Attractive entry point below fair value
• NPR: 8.1% | P/E: 4.6x | RSI: 44.3
• Fidson Healthcare
• Strong healthcare play with room for growth
• NPR: 9.4% | P/E: 9.6x | RSI: 44.5
• Aradel Holdings
• Oil & gas stock with exceptional profitability
• NPR: 66.7% | P/E: 8.6x | RSI: 4.3
• Vitafoam
• Consumer goods giant with healthy balance sheet
• NPR: 13.5% | P/E: 7.9x | RSI: 37.4
Takeaway
This list is not a buy, sell, or hold recommendation but a strategic guide for investors seeking undervalued opportunities. With the MPC meeting outcome pending, price moves may be sharp, making timing crucial.
Key Indicators Explained
1️⃣ Net Profit Ratio (NPR)
• What it is: Shows how much profit a company makes from its revenue.
• Think of it like this: If you sell ₦100 worth of goods and keep ₦10 as pure profit after paying all costs, your NPR = 10%.
• Why it matters: The higher the ratio, the more efficient the company is at turning sales into actual profit.
2️⃣ Price-to-Earnings Ratio (P/E)
• What it is: Compares the stock’s market price to the company’s earnings.
• Formula: Stock Price ÷ Earnings per Share.
• Think of it like this: If a company makes ₦1 per share and the stock trades at ₦10, the P/E = 10.
• Why it matters:
• Low P/E (like FCMB at 4.6x): Stock may be undervalued (cheap relative to earnings).
• High P/E: Could mean investors expect strong future growth or the stock is overpriced.
3️⃣ Relative Strength Index (RSI)
• What it is: A momentum indicator that measures whether a stock is overbought or oversold.
• Scale: 0 to 100.
• Interpretation:
• Above 70: Overbought → stock may be expensive, risk of pullback.
• Below 30: Oversold → stock may be too cheap, potential rebound.
• Between 40–60: Neutral zone (healthy).
Putting It Together
Let’s apply it to one example:
• FCMB Group
• NPR 8.1% → profitable.
• P/E 4.6x → cheap compared to earnings.
• RSI 44.3 → trading at a fair level, not overbought or oversold.
✅ This combo suggests FCMB could be an undervalued opportunity if fundamentals hold.