5 Best Stocks to Buy/Invest in Nigeria 2021

Investors buy stocks in companies they think will appreciate in value over time. Stock investment is one of the means people make residual income globally since ages. And Nigeria as an emerging economy holds a place of prime interest for investors. In 2020, Nigeria ended up on a positive direction with regards to stock exchange investment and was brought in the spotlight after the Nigeria Stock Exchange was adjudged by Bloomberg as the best performing stock exchange worldwide. The 2020 performance was attributed largely to low yields in fixed-income assets which fueled investors’ appetite for riskier assets. Chapel Hill Denham, a leading investment bank has touted that this trend will continue in 2021 given the current outstretched fixed-income valuations.

Best stocks to invest in Nigeria

Nigerian Stock Exchange Investment

In this article, I’ll show you some best stocks to buy or invest in Nigeria 2021 that can guarantee you optimum returns.  So, if you’re searching for a company to buy stocks from in Nigeria; you can choose from our list of best stocks to invest in. But before I proceed to show you some of these stocks you can invest in, let’s look at some of our positive indicators or criteria for selecting the best stocks.

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Positive indicators for good company’s Stocks to Invest in

Some of the positive indications for good companies’ stock you can invest in should include that the company must:

  • Maintain a sizeable proportion of market share consistently over the years
  • Demonstrate efficiency in the utilization of their assets consistently over some years
  • Introduce products and services that have been widely accepted
  • ultimately deliver value for shareholders
  • And much more, is that their financial indices in the recent past as well as their developments as regards their operations and ongoing must reposition them for the future to be more effective performers in their scope of business and the economy at large.

The stocks in our list have been ranked in no given order and the final decision on which stocks to invest in remains solely reserve for the individual investor (i.e. depending on your investment style and objectives). We’ll suggest that when you buy any of these stocks that you hold it for at least 3-6 months to get the expected ROI.

5 Best Stocks to Invest In Nigeria

Seplat Energy Plc

Seplat Energy Plc is one of the best stocks to buy or invest in Nigeria. Despite posting a loss of #28.9 billion losses before tax for the year ended 2020, they seem to always be on the news for the right reasons for over 12 months and running.  With a 71% and 21% price rally in its share price year-to-date and in June respectively, coupled with the company chairman’s expression of its decision to continue to pursue profitable acquisition opportunities, Seplat Energy is one stock that should be a toast of every investor’s portfolio.

Its dividend payout announcement of 5 US cents for the year ended December 2021 and 2.5 US cents for Q1 2021 has brought about excitement amongst stock investors and resultant increased demand for the company’s stocks on both the Nigeria Stock Exchange and the London Stock Exchange. Their dual listing on the two exchanges is another factor that has brought positive tidings as it creates an avenue for investors looking to repatriate foreign exchange.

Following the name change of the company from Seplat Petroleum Development Company Plc to Seplat Energy PC following a resolution at the end of its Annual General Meeting on 20th May 2021, the company is on a journey to redefine its operations to encompass opportunities available in the widely untapped energy sector in Nigeria which is evident in its current position as a major player in the nations power generation sub-sector with a 30% hold of the market.

Seplat Energy Plc is positioning itself for the future and this is a good indicator for investors with a futuristic outlook, especially as the company has expressed optimism of a higher proportion of its revenue to be generated from its investments in gas hence its investment in ANOH Gas Processing Company Ltd, an equally held joint venture between it and Nigeria Gas Company Ltd, a subsidiary of Nigeria National Petroleum Corporation. This will be a plus for a greener environment due to reduced gas flaring, thus allowing the company to take advantage of incentives contained in the Zero Reduced Flaring By 2030 Initiative introduced by the World Bank.

Livestock Feeds Plc

Another best stock to invest in Nigeria is Livestock Feeds Plc. Having a company that operates in the animal feed subsector of the Food, Beverages, and Tobacco sub-sector of the Nigeria Stock Exchange standing among the high performers in the economy reflects resilience, as well as a winning strategy that is sure to have a positive rub off on investment in its stock. This is true given the humongous challenges faced by players in that industry.

Livestock Feeds Plc, a company largely owned by UAC Nigeria Plc, has pulled its weight outperforming its peers and the entire stock market over the past five years. Its 1-year return compared to that of the Food, Beverage, and Tobacco sector, as well as the Nigeria Stock Exchange, stood at 200%; 32%, and 51% respectively for 2020. Investors have continued to bet big on the company leading to a 38 percent increase in its market capitalization from #4.2 billion from the beginning of 2021 to a current #5.8 billion.

The horizon looks even brighter for Livestock Feeds Plc with the issuance and enforcement of strict guidelines by the Nigerian Institute of Animal Science aimed at ensuring high-quality animal feed production, a move that has seen a surge in demand in the sector.

According to Agusto & Co’s 2021 Animal Feed Milling report projects that the industry in Nigeria is set for consolidation and growth. And with Livestock Feeds Plc already sprinting ahead of its sectoral peers, its stock has made our list of recommended stocks.

Access Bank Plc

Access bank Plc stock is another good stock to invest in Nigeria. The indices obtained from the financial statements of Access Bank Plc standing on their value are concrete enough to provide a basis why the stocks of this banking institution should be present on our list of stock to invest of Nigerian companies.

Its first-quarter ended 31 March 2021 earnings report revealed a Profit before Tax of #60.1 billion, representing a 30% increase year on year. Accompanying this was an impressive reduction in its Income Expense by 16% year-on-year for the same period which contributed largely to a positive movement of its Q1 2021 Profit after Tax by 30% to #52.6 billion year-on-year from #40.9% for the same period in 2020.

The bank’s drive to expand its retail business has seen its customer base rise by 941,631 during the quarter, a development that has resulted in a growth in savings accounts balance to #1.36 trillion which is a 4% increase year-to-date. All these have been made possible in part by the bank’s increased adoption of technology as is reflected in a recorded 29% year-on-year growth in USSD Transactions and 40% year-on-year increase in Mobile and Internet Banking Transaction Value.

With subsidiaries in sub-Saharan Africa, United Kingdom, United Arab Emirates, and presence in China, India, and Lebanon, Access Bank is still engaged in an aggressive expansion of its business which has seen it engage in moves to acquire the African assets of Atlas Mara Group. In a letter issued via its website and signed by the company’s secretary, Sunday Ekwochi dated 17 May 2021; it announced the completion of its acquisition of BancABC Mozambique, a development that is expected to create the seventh-largest bank in the Mozambican banking market. In another announcement credited to its website, it was disclosed that the bank had also signed a Share Purchase Agreement with Atlas Mara Ltd and ABC Holdings to purchase 78.15% of the Issued Share Capital of BancABC Botswana and it is expected that the transaction will be completed in the first quarter of 2021.

It is also worthy of note to mention that the stocks of Access Bank are listed both on the Nigeria Stock Exchange and the London Stock Exchange, a situation that provides an opportunity for investors that have an eye to repatriating their foreign exchange when the need arises.

LASACO Assurance Plc

LASACO Assurance Plc is another company that has made it on our list of the best stock to invest in Nigeria. From historical data, LASACO Assurance has shown to be one of the most volatile stocks on the Nigeria Stock Exchange with an average weekly price movement of +/-9%. However, this high volatility tends to have been offset by commensurate gains as its stock price has continued to generally outpace those of both its sectoral peers and the market with data available showing a 30-Day Return of 7.9%; -0.7%; and 2.2% for LASACO Assurance, NGX Insurance, and NSE respectively. This trend has also proved consistent for Q1 2021 with 16.3%; -3.0%; and 3.1%, in the same order. Its share price performance Year-To-Date stands at 328.57% making it the numero uno stock on the NSE by that criterion.

And this momentum seems to be nowhere short on steam as can be seen in the continuous rise in the company’s sales revenue over the past five-year period- 2016: #1.9 billion; 2017: #4.6 billion; 2018: #5.4 billion; 2019: #6.8 billion; 2020: #7.7 billion. Such steady growth in revenue is evidence that LASACO Assurance has a lot working positively for it as regards seizing a large chunk of premium in the still highly untapped Nigerian insurance market.

The prospect of this stock is further underscored by the Agusto & Co 2021 Nigeria Insurance Industry Report which projects increased demand for insurance products in 2021 because of the recognized importance of insurance due to the loss that followed the violence associated with the #EndSARS protest in October 2020.

Lafarge Cement Plc (WAPCO)

The last but not the least is the Lafarge Cement Plc stock. The company has made it on our list of best stocks to invest in Nigeria because the company is one of the big players in the cement manufacturing sector in Nigeria with a current market capitalization of #338.26 billion.  Lafarge Cement Plc is included in the NSE 30 basket of blue-chip stocks and has shown to be consistency with its past performance.

In the year ended 2020, its EBIT grew by 98.8% year-on-year to #30.8 billion with earnings per share (EPS) of 191 kobo, up from 96 kobo in the previous year. A dividend payout of 100 kobo per share for 2020 was announced at its Annual General Meeting which was held virtually on 25 May 2021. The Q1 2021 unaudited results of the company posted a 13.3% growth from #8.1 billion in the corresponding period the previous year to #9.1 billion.

This according to a statement on the company’s website was driven by strong volume growth. Given ongoing expansion projects on its production capacity, this growth is expected to continue to drive the company’s fundamentals in a positive direction. The company’s objective to broaden its market share is very feasible given its wide product range which includes the Elephant Cement, Ashaka Cement, and Unicem brands, which are major cement brands in the country.

In a statement credited to Khaled El Dokani, the company’s Chief Executive Officer, “the company focuses on being in a ‘sold-out’ situation where we can sell all that we produce.

Cement products being essential for construction activities which are certain to increase in the country with the emergence from the downturn brought about by the COVID-19 restrictions, it will be a very good bet investing in this stock.

 

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