Business

NGX must hold stocks with double digit upside for the year

With 2024 now behind us, investors should focus on aligning their portfolios with stocks poised to deliver strong returns in 2025.

In an environment where market volatility presents both challenges and opportunities, identifying equities with double-digit upside potential has become more crucial than ever.

Last week, the Nigerian equities market recorded its first weekly decline of the year.

Despite a resurgence in buying interest toward the end of the week, profit-taking activities in key stocks, including Dangote Cement (DANGCEM), triggered a mid-week downturn.

Consequently, the NGX All-Share Index (NGXASI) fell by 2.94%, closing at 102,353.68 points (down from 105,451.06 points in the previous week).

This decline brought the market capitalization to N62.85 trillion, representing a loss of N1.45 trillion in investor wealth and contributing to a year-to-date (YTD) return of -0.56%.

Despite the recent underperformance, bright spots remain for savvy investors looking to realign their portfolios for 2025.

Analysts have identified must-hold stocks with strong upside potential, driven by intrinsic valuations, industry trends, and strategic growth expectations.

However, it is important to note that analysts’ target prices are dynamic and subject to revision based on changes in company fundamentals, macroeconomic factors, and market conditions.

This highlights the importance of continuous monitoring to adapt to evolving circumstances.

Loading up a portfolio with stocks offering attractive risk-to-reward profiles is a strategy that could set the stage for a winning year ahead.

Here are the stocks investors should watch in 2025:

FBNH 

FBN Holdings stands out as a compelling investment for 2025, according to Arthur Steven Asset Management’s January 20, 2025, stock recommendation report.

The analysts’ target price of N49 represents an impressive 68% upside from last week’s closing price.

  • The stock ended 2024 with a YTD return of +19%, showcasing resilience and consistent performance despite market volatility.
  • Currently trading at 64% of its 52-week high, FBN Holdings offers significant room for recovery and growth as market momentum builds.
  • The target price reflects strong confidence in the company’s fundamentals and future growth prospects.

ACCESSCORP

Access Holdings closed last week at N24.21, delivering a modest YTD return of +0.84%.

Analysts have highlighted the stock as one of the top picks for 2025, with target prices from Futureview and Arthur Steven Asset Management set at N30.15 and N49.30, respectively, implying a projected upside of 64%.

  • Trading at 83% of its 52-week high, Access Holdings has 17% headroom before reaching its peak, often seen as an opportunity for further gains, especially if the fundamentals remain strong and market conditions improve.
  • The company’s strong earnings growth, strategic capital raise, and sector-leading position highlight its appeal as a long-term investment in Nigeria’s banking sector.

GTCO 

Guaranty Trust Holding Company (GTCO) closed last week at N58, offering a potential upside of 52%, based on analysts’ target prices.

  • Futureview’s target price of N72.35 and Arthur Steven Asset Management’s target price of N103.88 reflect the stock’s strong growth potential despite trading at 99% of its 52-week high.
  • GTCO’s financial performance is a key driver of its investment appeal. The company posted a record-breaking N1.2 trillion pre-tax profit for the nine months ending September 30, 2024, maintaining its leadership in the financial services sector.
  • This builds on its milestone of N1 trillion in pre-tax profit achieved in the first half of 2024, accentuating its ability to navigate macroeconomic challenges effectively.
  • Valuation metrics further solidify GTCO’s case: a trailing 12-month EPS of N44.50, a low P/E ratio of 1.30x, and an attractive dividend yield of 6.38%.
  • Despite trading near its 52-week high, GTCO’s robust fundamentals and analysts’ bullish targets make it a compelling choice for 2025.

Dangote Cement 

Dangote Cement remains a stock to watch, despite navigating a challenging operating environment. Futureview and Arthur Steven Asset Management have issued buy ratings, with target prices of N495 and N507.50, respectively, representing a 27% upside potential from last week’s closing price of N400.

Trading at 52.42% of its 52-week high, the stock presents a strong case for a rebound as market conditions stabilize.

However, with a beta of 2.12, investors should expect heightened volatility, making it more suitable for those with a higher risk tolerance.

The first nine months of 2024 reveal a more challenging landscape for Dangote Cement, with rising operational costs eating into profit margins.

  • These headwinds have undoubtedly put pressure on the company’s financial performance, raising questions about its ability to deliver strong earnings growth in the near term.
  • Despite these challenges, the analysts’ bullish outlook appears grounded in the company’s market position. As Africa’s largest cement producer, Dangote Cement benefits from scale, market dominance, and an expanding infrastructure sector, which should support growth as economic conditions improve.
  • Moreover, its strategic investments in operational efficiency and capacity expansion are expected to yield returns in the medium to long term.
  • While the analysts’ perspective on a 27% upside potential depicts undervaluation, investors should weigh the risks of short-term volatility against the prospects of long-term recovery.

Aradel 

Aradel closed last week at N556, presenting an upside potential of 28%, based on Futureview’s target price of N713.13.

Although the stock recorded a YTD loss of -7.33%, it trades at 65% of its 52-week high of N850.10, leaving ample room for recovery as investor sentiment strengthens.

  • The company’s financial performance supports this bullish outlook. Pre-tax profit in 2023 surged by 237% YoY to N112.164 billion, while the first nine months of 2024 saw pre-tax profit grow 412% YoY to N191.457 billion, surpassing its 2023 full-year profit by 71%.
  • Futureview’s stance on undervaluation appears well-founded, given Aradel’s robust financial performance and strong earnings trajectory, making it a compelling buy for investors seeking high-growth opportunities in 2025.
  • Overall, these stocks represent strong opportunities for investors looking to build a portfolio capable of delivering double-digit returns in 2025.
  • However, as always, investors are advised to monitor these stocks closely, taking into account changing market conditions and company-specific developments to optimize their investment strategies.

About the author

Collins Nnebedum

Collins Nnebedum is a seasoned writer with a knack for delivering insightful analysis on current affairs and breaking news. His dedication to factual reporting makes him a trusted voice on eNews Nigeria.