Sterling Financial, FMN, BUA Cement are stocks to watch this week

The Nigerian stock market returns for another week of trading activities, with Sterling Financial Holdings Company, Flour Mills of Nigeria (FMN) and BUA Cement making the list of stocks to watch.

Ripples Nigeria stocks watchlist is a selection of stocks monitored for viable trading or investing opportunities. An investor may casually generate a list of equities for investment purposes. But we have taken the pain to do that based on certain parameters in order to save you that hassle.

Kindly note that Ripples Nigeria Stocks Watchlist is not a buy, sell or hold recommendation. It is advisable to consult your financial advisor before making any investment decision.

Sterling Financial Holdings

Sterling Financial Holdings Company made the list following series of acquisitions by four top directors at the financial institution and its banking subsidiary.

Raheem Owodeyi, Abubakar Suleiman, Tunde Adeola and Yemi Odubiyi paid N515.26 million to acquire 155.83 million shares of Sterling Financial Holdings Company.

Share acquisitions by big shots in a company often shows their faith in the growth prospects of the firm and usually impact the confidence of the capital market.

But regardless, investors also need to trade with caution and not follow every footprint of major shareholders or directors in the capital market, as share price movement is unpredictable.

Flour Mills of Nigeria

Flour Mills of Nigeria reported N9.33 billion loss in the period ending June 2023, as the company struggled with the devaluation of the naira in the first half of this year.

READ ALSO:Sterling Bank delists from NGX, transfers shares to Sterling Financial Holdings

This weakened the ability of Flour Mills of Nigeria to pay dividends in the longrun, as failing to record profit after tax affects the firm’s contribution to its retained earnings, from which it distributes wealth to shareholders.

The firm’s financial loss was compounded by the decline in its operating profit, which dropped to N7.11 billion in the period ending June this year, from last year’s N15.28 billion.

The drop in operating profit was driven by a foreign exchange loss of N22.5 billion, weakening FMN’s retaining earnings. Its left to see how shareholders will react to this in the last month of the third quarter, so trade with caution.

BUA Cement

The Chairman of BUA Group, Abdul-Samad Rabiu, revealed that the cement company is planning on reducing the price of the firm’s product before the end of the year.

This move could impact the revenue generation of BUA Cement and the firm’s bottomline, as well as its retained earnings, from which shareholders are paid dividends.

Although Rabiu said the company will increase its production capacity by at least 40 per cent to 70 million tons before the end of the year to enable BUA Cement reduce its products prices.

While the price reduction could weigh on its turnover, it can also help BUA Cement increase sales, as its rival, Dangote Cement is criticised for offering its products at premium prices.

For now, the decision leaves BUA Cement’s growth prospects in a blurry state, so trading with caution is advised, as the capital market awaits the price reduction and capacity expansion.

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