Fund managers reveal their top-5 stock picks for 2021; Zenith, Access still in the game

Charles Abuede

Top Nigerian fund managers from the leading asset management houses in Nigeria have highlighted the top pick stocks to watch out for in 2021 following their performances in the previous year and their prospect which investors are seeking for as they prowl for best returns in the Nigerian equities market.

Recently, Business A.M pooled the top picks from leading fund managers in Nigeria during the just concluded 2021 mutual funds e-conference outlooks and awards organized by Nigeria’s leading business news publishing house, Business A.M, in partnership with Anchoria Asset management limited, Quantum Zenith Asset Management Limited and United Capital Asset Management Limited, and has in assembly Nigeria’s leading fund managers and asset management firms of the decade, industry experts and seasoned panellists after extensive research by judges and the research team, including the review of data from the Securities and Exchange Commission of Nigeria and taking soundings from third-party industry experts.

From the responses received, it is no surprise that the banking sector emerged the top sector to watch out for in the equities in this year as the sector has been projected by experts to witness an increase in interest on income due to higher or increased loan-to-deposit-ratio (LDR) resulting from increased non-performing loans (NPLs) and a slow in banks non-banking interests. Also, the CBN may introduce new capital requirements for banks in the lower tier.

Also, the consumer goods sector, according to the experts, will see improved revenues resulting from improved demand due to the low budgeting power of the consumer as the higher cost of inputs will ensue owing to a loss in the naira value. Similarly, the cement or industrial goods sector will witness a slight increase in cement prices and demand for cement in Nigeria and other African countries and there will be stronger competition in 2021.

What are the projections from Nigeria’s leading asset management houses?

In the views of Dele Ige, the Managing Director of PAC Asset Management Limited, he identified the top 5 stocks to watch out for in 2021 in terms of the stock price and the need to take a position as an investor. His top five picks include:

ZENITH BANK

Zenith Bank which is based on its good performance in the market as well as their financial numbers which speak well and high volume for the tier-1 banking group in Nigeria.

VITAFOAM PLC

Vitafoam is another stock to watch out for in 2021 because they have performed well over time and considering the fact they are already planning on diversifying into a new business line

ACCESS BANK

Access bank, though, yet to announce their full-year 2020 numbers have continued to performed impressively over time and they still remain a prospect for investors to take a position on.

LAFARGE (WAPCO) PLC

Lafarge now known as Wapco Plc, which is a major cement manufacturer and player within the industrial goods index.

DANGOTE CEMENT

Dangote Cement is another prospective stock to watch in 2021 considering the performance and stock price growth over the years.

According to Dele, he said: “However, Lafarge and Dangote Cement will experience an impressive performance in 2021 due to the fact the Nigerian government are now changing tastes or preference to concrete roads as against the asphalt which was previously used for road construction and maintenance which is expected to drive growth in the sector and bring about an improved revenue resulting from increasing demand for these products in Nigeria and other African nations and also the benefits coming from engaging in the exportation of locally made commodities through AfCFTA treaty which is currently ongoing.”

For Odirin Oginni, CFA, who is the Managing Director at United Capital Assets Management Limited, her top 5 stock picks are:

UNITED CAPITAL STOCKS

United Capital stocks, which has over time, shown strong performance with sustained growth and the capability to navigate the current economic challenges.

UNITED BANK FOR AFRICA

United Bank for Africa which has always remained one of the fundamentally sound banks in Nigeria and continue to show resilience across all cylinders, disregarding the effect of the pandemic on the economy as the bank recorded a double-digit improvement across all its major income lines.

ZENITH BANK

Zenith Bank has maintained its position as a tier-1 bank in Nigeria as it has continued to deliver stellar performance over the years. Also, the bank showed resilience in its FY 2020 numbers and recorded moderate growth despite the economic disruption brought about by the covid-19 pandemic.

MTN NIGERIA

MTN Nigeria which has continued to fire impressively across all income lines and its investments in infrastructure amidst the covid-19 pandemic and other regulatory setbacks.

ACCESS BANK

Access Bank, which has continued to expand its footprints across the continent and beyond and following its restructuring into a holding company in a bid to become the largest bank in Africa. the banking giant is expected to deliver better performance this year, trickling to its earnings as it posted strong gains in 2020.

Also, Ifeoluwa Dixon, the Senior Vice President and the Head, Fixed income Portfolio Management at FBNQuest Asset management Limited delineated her top 5 picks in the following order of the Telcos, the industrial goods and banking stocks to be the top-performing stocks in 2021. According to Ifeoluwa, they include:

MTN NIGERIA

MTN Nigeria which has continued to push the telecoms index on the local bourse and also posting impressive numbers in its FY 2020 financial numbers.

BUA CEMENT

BUA Cement, a leading cement manufacturer in Africa joins the list following the expected gains from the AFCFTA treaty as well as the border reopening which will drive increasingly expected demand for cement and houses within the real estate sector.

OKOMU OIL

Okumu Oil Plc, following its expansion drives to become one of Africa’s largest oil-palm producers will definitely see a surge in the stock price as well as an impressive performance in its operations and trading numbers.

GUARANTY TRUST BANK

Guaranty Trust Bank, which has also received approval in principle to restructure into a holding company as a means to diversify its business lines from core banking to drive revenue growth and coupled with its stronger capitalization level and higher operational efficiency. Hence, the bank remains the toast of investors across the investment horizon and orientation spectrum.

ZENITH BANK

Zenith Bank after posting its FY 2020 results which have left many in amazement at its stellar performances over the years still keep in the top flight with a history of a healthy balance sheet, strong asset quality due to diversified loan books, cost efficiency and a sustainable business model.