Stocks That Can Make You Rich In 2007

They are all out or on the way in a few weeks. Not so sure about Dangote.
Ten-ten naira of each is a formula for mediocrity (and I don't mean that as an insult). I haven't seen the propsectus for anything except Access so I can't comment much. Japaul will be hard to justify. Even the triple-digit growth is hard-pressed to overcome tripling the number of shares.

Why not join the insurance party? I'm the dee-jay!

@ Easi

Japaul looks like a very diff piece of cake with all these shell contracts and favourable govt laws
Those guys might tripple profit easier than we think o, and their full year result was released on friday, eps is 30k
Waiting on their prospectus though

Hello everybody,
You guys are great!! I'd like to say that one has a lot to gain from you guys and not just in business!! Your conversations are really gracious ( esp easimoni) Keep it up!!!
Does anyone have any info on dunlop???
Concerning this EPS and PE stuff, some companies have zeros, why is it so?
Thank you

On Japaul, people need to wait for the prospectus to make an informed decision.

Yes the government incentives is there but note also that they operate mainly in the Niger Delta and the crisis there will not help the business. Yes they have contracts with Shell (not that big) but note also that Shell is reducing its activities and business. Funding problem is making them to scale down.

I can see that a lot of people are buying names of companies. Soon people will learn.

On why there are many offers, part of investing 101 is to know that when the market is over valued, there will be a rash of offers!!!!

easimoni, wanajo, temmie, frankiriri, shigidi et al,

I've learnt how to calculate the PE, EPS and some other values. However, how do I translate them into valuable information for making good investment decisions? for instance, the average market PE is 24, does it mean any company with a projected PE of less than 24 is a good investment?

I have about N1.2m to invest within a week,

I intend to have 2 seperate "portfolios",

1.  for aggressive trading, willing to take risk for maximum returns in the shortest possible time
2.  for long-term investment

what would your recommendation be, divided into the 2 seperate "portfolios"?

Thanks.

Shigidi is spot on
a pe of less than 24 may suggest but does not necessarily imply a cheap stock.
the keyword is the rate at which a company can increase earnings growth.

For instance, I would be happy to buy a certain stock at a PE of less than 20 if it grows PAT at 50% annually.
many companies in naija have seemingly grown PAT at more than 50%, the problem is that they have also issued more shares through through ipos. pos, right issues, gdr etc. Issuing new shares dilutes the eps calculation and almost always reduces eps making the company even more overvalued at least in short term.

Another thing is that industries differ. Some industries attract higher average pe's than others maybe because of profit margin. the banking industry has a higher pe than most, i am not sure how justified the current pe's of 30 are though.

Insurance also has relatively very high pe ratios, this is because a lot of people believe that the industry has immense earnings power, this is probably true to an extent. But too many insurance companies have problems with their capital structures, having too many shares, plus NDIC/CBN/NAICOM or whoever is yet to release money raised during consolidation/capitalization to insurance companies so we can conclude that there is still potential for earnings growth.

Finally as Frankiriri reminded sometime ago, some pe's are low because a company is dying, 
A dying company is not a cheap company

My main man Shigidi! I hope the meaning of your name is not the Yoruba translation i.e statue (no disrespect o!)

Thanks for you candid response but can you be more specific or recommended buy for 2 "pots" of stocks



Oga easi (I like the sound of that ) thanks for your insights. I have to go back to the drawing board to do some more calculations and research, I'm really getting to enjoy this investing thing.

Also, any recommendation buy for my "pots" of stock from your side?


Cheers

@ koksie,
shigidi has answered you quite well but I'd keep Oceanic out of the short-term list (the banks are asking for a beating) and Oando out of the long-term (I own a lot of Oando, but if u read this and other threads, you'll find they have a lot of issues that Wanaj0 and others have raised, I'm looking for a good time to bail)

Nice work Shig!

i learnt from the best oga.
by the way, easimoni, why are u so off banks right now. is there something im missing

You got it wrong on OandO. For the short term a no no. For the Long term, they will come out good. Current policy is not favourable to them. With Yaradua coming from the socialist/marxist spectrum, I will be wary of the petroleum industry. The margins are tight, competition high and the sector fully regulated.

Banks will continue to grow. They are the one propelling the economy. In NIgeria, banking stocks will likely form nothing less then 50% of your portfolio. Which other sectors are available?

I will be wary of insurance stocks. Not enough info to evaluate them. Most of them have merged/acquired other insurance companies. The effect of that is yet to be factored into the outstanding shares of the companies.

For now, Flour Mills, Nigerian German and WAPCo are really looking attractive for the long term. Beta Glass and ETI are also worth considering. Flour Mills is however the best. Imagine that even with only 90k dividend declaration the share is still holding its own at about 75.00?

Personally, I like going for stocks that are yet to be hyped and leave once hyping starts. So all the stocks being hyped to the high heavens are not for me!

@ wanaj0

what's the deal about flour mills?, i have looked at it but wasn't too sure abt this one

Can u pls share?

easimoni and shigidi, whats up with mbenefits? with 5.9bn shares and 0.45bn half-year PAT, forward eps looks to me to be about 169k (based on FY PAT of N1bn) and projected price of N3.38 (based on a pe of 20). At the current price of N3.15, this doesnt look too attractive.

or is there something i am missing?

Flour Mills is a company in the wrong group. It should actually be in conglomerates. It is well diversified with good income streams. One of the few companies that has changed over to gas fully now. Involved in sectors where there is significant growth. Just finished some capital investment so be expecting increased earnings. Good EPS forecast. Stable management.

I will be expecting a bonus next year to bring the price down a bit.

Current EPS is N4.76. I forecast an EPS of N6.50 for them.

On insurance, do you know whether MB acquired any insurance companies. Get the FULL AUDITED financial statement and read all the notes to the accounts before making judgement on any of teh insuarnce companies. Most for now are just good for speculative purposes.

For me the best Insuarnce company is a HOLD until all the issues surrounding the consolidation exercise is sorted out! You have a lot of magomago going on with the insurance companies. I will watch from afar. At least, I can see better prospects so no wahala. Those that bought the PO's are the one enjoying. UNIC PO was at 1.10. Crusader was at about 1.95 or so. NEM was at 56k.

Thanks. Have they established subsidiaries? Have they divested in any of them? What's the shareholding structure like?

But I am not believing all the stories until the exercise is over. There are so many behind the scenes moves going on.