Investors should add Dangote Cement Nigeria Plc, Zenith Bank Nigeria Plc,and Guaranty Trust (GTBank) Bank Plc to their portfolio.
These three firms are value stocks because they have a very low price to earnings (P/E ratio), low price to book (P/B) ratio, and high dividend yield, and there upside potentials in the industry they operate.
They also have the potentials to outperform growth, as investors have dumped shares due to a myriad of challenges across sectors and lack of policy direction on the part of President Muhammadu Buhari.
Dangote Cement, the largest producer of the building material in Africa’s largest econoy and the most capitalized firm, has a price to earnings (P/E) ratio of 2.81 times, which is lower than earnings per share (EPS) of N22.67.
Read also: Dangote refinery: Governors’ Forum hails Lagos govt for ‘smooth take-off’
The proposed capital expenditure spending by Federal Government and the need to bridge an infrastructure deficit are expected to give a fillip to cement volumes, adding impetus to the future earnings of the cement maker.
Dangote has a dividend yield of 11.44 percent, and it paid an N272.91 billion from distributable profit to shareholders. It had agreed share buyback and reverse split.
Stock buybacks refer to the repurchasing of shares of stock by the company that issued them.
Zenith Bank’s shares are trading at 2.89 times earnings, while its earnings per share are N6.89. It has a dividend yield of 15.22 percent. The lender is making an inroad into retail banking, a venture that is expected to impact positively on future earnings.
Guaranty Trust Bank (GTBank) has a price to earnings ratio of 4.47 times, which is higher than the earnings per share of N6.62. It has a dividend yield of N9.29.
The largest lender by market capitalization has a return on average equity of 32.58 percent as at September 2019, the highest in the industry, a manifestation of improved efficiency.
