Best & Worst stocks of 2019   

Dec 31 (Lagos) - As the year winds down to the last trading day it is time to reflect on the months gone by. 2019 was a difficult year for stock market investors in Nigeria. The market remained under a bearish sentiment for most of the year. We got a few trickles of hope here and there but it always ended badly. At the same time there were couple of stocks that notched up +100% gains while a whole basket of stock that declined sharply with many hitting multi-year lows. Lets take a look at best and worst stocks of 2019.

Best stocks of 2019

1) Dangote Flourmills Plc ( DANGFLOUR ) - The company was acquired by crown flour mills (Olam) and as soon as the news came out of their interest the stock started rising up like a phoenix. The stock saw a 270% gain which saw its shareholders laughing to the Bank throughout the year. If you invested in this stock, it was a beautiful year and you were untouched by all the bears in the jungle. Olam agreed to pay N 120 billion for 5 billion units at N 24 per unit. This success story had nothing to do with increase in sales or net profit, it was purely an acquisition story. 

2) C&I Leasing Plc ( CILEASING )- This stock has been a huge success story of the past 2 years, especially for ones who sold when the stock rose to above N 9 per unit earlier this year. The company has been reported positive numbers and announced a dividend also which failed to excite analysts. However, the company decided to bring in a rights issue following which the stock prices started coming down and is down more than 40% from highs of the year. The stock is currently trading well below the rights issue price of N 6 per unit. 

3) Cornerstone Insurance Plc ( CORNERST ) - Yes an Insurance stock finally made it to this annual list. Cornerstone Insurance stock was beat down to 20 kobo per unit after the 50 kobo rule. Now it is at 41 kobo so that is how it made it to this list. Shareholders of this company saw their stock remain at 50 kobo levels and they saw it getting destroyed to 20 kobo levels. Maybe they will be breathing a sigh of relief now with hope that it will continue to rise. Insurance stocks as a whole saw some life return to them but these stocks trade at valuations that you give to companies that cannot be trusted. Cornerstone decided to sell its head office building in Victoria Island following which the stock price doubled. The Company recorded a N 3 billion gain on fair value changes in financial assets which was related to gains they recorded in their investment in shares of MTN ( MTNN ). 

4) A.G Leventis ( AGLEVENT ) - Similar to no.3 this company's stock price fell to 24 kobo per unit and then regained 55 kobo levels and that is all it took to make the list of best stocks of 2019. That is how poor the year was for stocks. The company is de-listing from stock exchange and going to be private company in future. When the shares are transferred each shareholder will receive 53 kobo per unit according to their scheme of transfer of shares. It worked out well for shareholders after all to receive 53 kobo instead of seeing their shares trade at 25 kobo levels like they were. Company reported loss of N 904 million for the first 9 months of 2019. 

Now let us take a look at the worst stocks of 2019. This basket is over-full as a result of the bearish grip on the exchange in 2019. Even some of the best companies performed badly in 2019. 

1) International Breweries Plc ( INTBREW ) - This was one of the best stocks of 2018 but gave up all those gains and then some in 2019. From trading near N 60 per unit in 2018 now it is trading at N 9.5 per unit down almost 70% for the year. The company reported loss of N 16.4 billion for the first 9 months of 2019 while their top line sales zoomed to N 97 billion in that period. In October the company announced a rights issue at N 9 per unit. That is where the shares are at about now. 

2) Goldlink Insurance Plc ( GOLDINSURE ) - Company finally reported its annual result after missing the reporting deadline multiple times and released statement saying there were issues in auditing during 2016 and 2017 which led to the delay. They reported loss of N 275 million for year ended March 31 2019. The annual report looks suspicious to say the least as their income statement looks like that of a manufacturing company than an Insurance Company. The MD of the company resigned this year as well. The stock declined to 20 kobo levels and we have to say that we cannot always blame the market for punishing Insurance stocks. There are Insurance companies operating in Nigeria which do not observe corporate governance standards that are expected from such companies. 

3) Glaxosmith Kline Nig Consumer Plc ( GLAXOSMITH ) - Shares declined to five year lows after company decided to outsource manufacturing to FIDSON as part of changes in their operating model. Shareholders were not impressed, and the sentiment changed to negative following pretty good couple of years when the company sold its Ribenna drinks division to Japan's Suntory Group and announced a special dividend. Shares were well above N 20 during those days. 

4) Guinness Nigeria Plc ( GUINNESS ) - Another brewery on this list for the year. The company seems to be finding it difficult to appeal to consumers who are squeezed due to effects of recession and high inflation. Quarterly results kept disappointing investors. Share are down 58% for the year. Now that is more bitter than what they brew. 

So those were the best and worst stocks of 2019. However there are three others that must be mentioned on special invitation for 2020:

1) Access Bank Plc ( ACCESS ) - The merger with Diamond Bank Plc was the highlight of 2019. They created a commercial banking giant in Africa. Shareholders of Diamond Bank Plc were handsomely rewarded by Access Bank while some analysts thought they over paid. Whether they did or not, shareholders of Access Bank reaped the rewards of the deal with the stock price climbing sharply in the third quarter to above N 10 levels. The stock doubled but gave some gains up as a result of profit taking. On the watchlist for 2020 for sure. 

2) Unilever Nigeria Plc ( UNILEVER ) - The company reported disappointing quarterly results throughout the year and as a result its stock price was heavily punished. The stock has gained more than 30% to the lowest levels it hit but still down significantly for the year. Investors should keep an eye on this one in 2020 because this stock is one of the first stocks that foreign investors look at when they start looking at Nigeria as an option for investment. Those that bought in previous month are already sitting on pretty decent gains. 

3) Dangote Cement Plc ( DANGCEM ) - Nigeria's most capitalized company was punished for less than exciting quarterly results. Another company that investors should keep an eye on in 2020. 

The Economy – Nigeria’s economy on the whole continues to be under dark clouds as a report by ratings agency Fitch gave a very negative assessment and was picked out by some of the top analysts in the country who also shares it widely on whatsapp groups and created more negativity. 

They spoke about the need for a devaluation of Naira eventually and the cost of running government along with the borrowing. Then the former President came out and spoke against all the borrowing that the government is undertaking. He did not speak a word on all the funds mismanagement under his regime and why there is no light despite billions of dollars his administration spent on it. 

All these things are increasing the negative sentiment which already exists internationally about investing in Nigeria. That is something we need to break out of in 2020 if we are to see gains in the stock market. 

reporting for on Monday, December 30 2019 from Lagos, Nigeria
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