Best performing stocks in Nigeria May 2023

In the midst of a difficult macroeconomic environment, the Nigerian stock market displayed amazing resiliency.

The All Share Index (ASI) has increased 8.62% year-to-date (YTD) as of May 31st, 2023, despite the high inflation rate of 22.22%, the political unpredictability before the presidential election, and the lack of stable foreign exchange that hindered economic activities in the first quarter of 2023.

In the first five months of the year, certain equities posted triple-digit returns, demonstrating their remarkable performance. These are primarily businesses with solid financial foundations, a variety of revenue sources, and market advantages.

Despite a difficult Q1 2023, marked by elections and naira scarcity, several stocks delivered impressive returns. The top performers came from a range of sectors, indicating diverse opportunities for investors.

Transnational Corporation of Nigeria PLC (Transcorp) was the top performer, with a return of 173%. Transcorp is a diversified conglomerate with interests in power, oil and gas, hospitality, and real estate. The company’s strong performance was driven by growth in its power and oil and gas businesses.

Conoil PLC, a major player in the petroleum sector, was the second-best performer, with a return of 119%. Conoil’s strong performance was driven by higher crude oil prices and increased production.

Nigerian Aviation Handling Company PLC (NAHCO) and Geregu Power PLC were the third- and fourth-best performers, respectively, with returns of 114% and 107%. NAHCO is a ground-handling company that provides services to airlines at Nigerian airports. The company’s strong performance was driven by increased passenger traffic. Geregu Power is a power generation company that operates a 400-megawatt power plant in Kogi State. The company’s strong performance was driven by higher electricity tariffs.

These results suggest that investors can find opportunities for growth in a variety of sectors, even during difficult times. However, it is important to do your research and select stocks that are well-positioned to weather economic downturns.

BUA Foods PLC, Cadbury Nigeria PLC, and PZ Cussons Nigeria PLC all had strong performances in the food and consumer products industry, with returns of 100%, 50%, and 49%, respectively. With returns of 68%, 63%, and 46%, respectively, Berger Paints PLC, Axamansard Insurance PLC, and Sterling Bank PLC also had a remarkable performance.

The resilience and growth potential of these equities is highlighted by their remarkable gains in the midst of the difficult Q1 2023 and high inflation rates. As the Nigerian economy navigates these difficult times, investors should attentively follow market dynamics and the impact of economic factors to make wise investment decisions.

Top 5 Stocks with the Best Returns in May 2023

1. BUA Foods PLC

BUA Foods PLC has had a remarkable year-to-date (YTD) performance, with its stock price rising by 100%. As a leading player in the food and consumer goods sector, BUA Foods has successfully navigated a challenging business environment, including high inflation rates and a difficult first quarter of 2023.

The company’s diverse product portfolio, strong distribution network, and focus on quality and innovation have all contributed to its impressive performance. BUA Foods’ ability to meet consumer demand and adapt to changing market dynamics has solidified its position as a key player in the Nigerian food industry.

In 2022, the company reported one of the most impressive results on the Nigerian Stock Exchange (NSE), with a profit after tax of N91.3 billion, up 30.9%. It followed this up with another impressive Q1 result of N40.4 billion.

Here are some of the factors that have contributed to BUA Foods’ strong performance:

• Diverse product portfolio: BUA Foods has a wide range of products, including flour, sugar, pasta, noodles, and edible oil. This helps to mitigate risk and ensures that the company is not too reliant on any one product.
• Strong distribution network: BUA Foods has a strong distribution network that reaches all parts of Nigeria. This allows it to get its products to consumers quickly and efficiently.
• Focus on quality and innovation: BUA Foods is committed to producing high-quality products that meet the needs of consumers. It also invests heavily in research and development to stay ahead of the competition.

BUA Foods is well-positioned for continued growth in the future. The company has a strong track record, a diverse product portfolio, and a strong distribution network. It is also committed to quality and innovation. These factors should help BUA Foods to continue to outperform its competitors in the Nigerian food industry.

2. Geregu Power PLC +107%

Geregu Power PLC has witnessed significant growth with a YTD return of 107%. The company operates in the power sector and is involved in electricity generation and distribution.

Geregu Power’s impressive performance can be attributed to its contribution to addressing Nigeria’s power deficit and its strategic partnerships.

• Despite the challenges faced by the industry, Geregu Power’s strong performance reflects the company’s ability to attract investor confidence thus rewarding the stock with 107% growth.
• For example, Afrexim Bank’s Feda acquired a 5% stake in the power company expressing confidence in the stock’s ability to continue to deliver impressive returns.
• The company also paid its shareholders a massive N20 billion dividend in 2022, it is the very first year of being listed on the NGX.  Geregu Power Plc said it has projected to generate N18.17 billion in revenue for the second quarter ending June 2023.
• The power firm is also projected to rake in N8.79 billion in gross profits. Targets for a profit before and after tax were put at N6.94 billion and N4.84 billion, respectively.

3. Nigerian Aviation Handling Company PLC

An incredible YTD return of 114% has been reported by Nigerian Aviation Handling Company (NAHCO) PLC. Due to its crucial function in the aviation sector, where it offers a variety of ground-handling services to airlines and related industries, NAHCO has demonstrated significant performance.

• NAHCO has managed its operations with resilience and agility in spite of the difficulties the aviation industry has experienced trust.
• Additionally, the corporation declared a profit after tax of N2.67 billion, a 240% increase over the N771 million reported a year earlier.
• In the first quarter of the year, the company continued to grow its profit after taxes by an astonishing 100%.

4. Conoil PLC +119%

Conoil PLC, a major player in the Nigerian petroleum sector, has had a strong year-to-date (YTD) performance, with its stock price rising by 119%. This is despite the challenging first quarter of 2023 and the impact of high inflation rates.

Conoil’s strong performance is likely due to a number of factors, including:

• Favorable pricing and market dynamics: The global oil market has been strong in recent months, which has benefited Conoil’s refining and marketing businesses.
• Impressive full-year 2022 performance: In 2022, Conoil reported a profit after tax of N6.2 billion, which was more than double the N3 billion reported in 2021. This strong performance is likely due to a number of factors, including increased sales volumes and improved margins.
• Resilience: Conoil has demonstrated its resilience in the face of challenges, such as the COVID-19 pandemic and the global oil price crash of 2020. This resilience is likely due to the company’s strong financial position and its focus on operational excellence.

Overall, Conoil is a well-managed company with a strong track record of performance. The company is well-positioned to continue to grow in the future, given the favorable outlook for the global oil market.

5. Transnational Corporation of Nigeria PLC +173%

With an incredible YTD return of 173%, Transnational Corporation of Nigeria (Transcorp) has emerged as the best-performing stock.

• The business has demonstrated its capacity to negotiate a difficult business climate, including the challenging Q1 2023 defined by elections and a shortage of naira.
• The majority of Mr. Otedola’s disclosure that he had purchased a 5% or more investment in Transcorp in April is responsible for the company’s 173% return.
• Investors felt the announcement could result in a share grab as fellow billionaire Tony Elumelu tightened his hold on the company, which sparked a surge in the shares.
• As anticipated, the share price increased by 173% during that time, making it the stock with the best performance so far this year.

Conclusion

The Nigerian stock market is a popular destination for investors seeking long-term returns and diversification opportunities. The market offers a variety of stocks across different sectors and industries, which can suit different risk appetites and investment objectives.

However, investors should be aware of the inherent risks and volatility that come with investing in emerging markets such as Nigeria. These risks include:

• Political instability: Nigeria is a young democracy with a history of political instability. This could lead to changes in government policies or even violence, which could impact the stock market.
• Economic volatility: Nigeria’s economy is relatively volatile, due to factors such as oil price fluctuations and changes in government policy. This could lead to changes in stock prices.
• Currency risk: Nigeria’s currency, the naira, is not as stable as currencies in developed markets. This means that investors could lose money if the naira depreciates against other currencies.
  Despite these risks, the Nigerian stock market can be a rewarding investment for investors who are willing to take on some risk. The market has a long history of growth, and there are many good companies listed on the Nigerian Stock Exchange (NSE).

Here are some tips for investors who are considering investing in the Nigerian stock market:

• Do your research: Before you invest in any stock, it is important to do your research and understand the company’s business model, financials, and prospects.
• Diversify your portfolio: Don’t put all your eggs in one basket. Spread your money across different stocks, sectors, and industries.
• Invest for the long term: The Nigerian stock market is a volatile market, so it is important to invest for the long term. Don’t panic sell if the market takes a dip.

By following these tips, you can reduce your risk and increase your chances of success when investing in the Nigerian stock market.

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