Here are the best 7 Penny Stocks to buy and invest to in Nigeria.
Any shares that trade for less than a dollar are known as penny stocks. They are shares that are common to small public companies. Penny shares are valued over-the-counter rather than on the trading floor. Penny share has a low price within the range of N5 and below per share. This means that you do not need plenty of money before you can invest in penny shares.
When considering penny shares it is helpful to note the low market price of shares and its correlation to low market capitalization.
A market capitalization has to do with a company’s cumulative dollar market value of all outstanding securities. Investors often buy a large number of shares for little money, because penny shares are cheap. This preference makes the penny market extremely unpredictable. The higher the volatility the greater the risks in investing in penny shares.
Holders of shares in penny stock companies often find it risky to cash-out positions because it has little liquidity. Liquidity involves the compatibility of investments and responsibilities. This includes, liquid capital which is the amount of money owns by a firm. Market liquidity simply means the ease with which assets can be sold.
Accounting liquidity is the ability to meet cash obligations as at when due.
One of the major concerns that investors should take note of before acquiring penny shares is the lack of information surrounding the company offering the penny stock. Most of the information is unreliable, filled with lies, and misleading. Social media these days has made it very easy for fraud to be carried out. Even though the companies offering penny stocks are small, the scam involved can run into millions of dollars.
It is important to know that there are no guarantees when investing in penny shares during high inflation. At best they may be inflation safe but there are no 100% guarantees for returns.
Now that we have understandings of what penny stock is and some of the challenges involved in it. We can now move on to the 7 types of penny stocks you as an investor need to invest in Nigeria, lets dive right into it.
The seven(7) best penny stock to buy in Nigeria are;
1. Fidelity Bank:
Because of the risks involved in penny shares, customers can only buy and sell penny stock after acknowledging their understanding regarding the risks associated with trading it. Fidelity bank’s stock is one of the top-performing stocks that has formed a golden crossover. The company’s stock 50days SMA is 2.1 whilst its 200 days is 2.04. They are one of the banks extending their loan book, they are also investing in equity and debt instrument.
Fidelity customers have access to over-the-counter markets. They do not charge anything extra to trade penny stocks neither are there special account requirements. There is an assessment of between $0.01 and $0.03 per $1000 of principal in addition to your commission that is added to the sell order, this is used to cover the government cost of regulating the security market and professionals. Fidelity customers can trade OTC equities without paying any additional fees other brokers do charge for this privilege.
2. Livestock Feed:
Livestock Feeds Plc manufactures and markets animal feed products. The Company’s products include poultry, pig, and cattle rations, meat cubes, and pallets.
They are involved in the manufacturing and marketing of animal feeds and concentrates.
The current share price of livestock feeds is N1.81. The livestock stock closed its last trading at N1.81 on June 18, 2021, per stock on the Nigerian Stock Exchange recording a 1.09% drop from its previous closing price of 1.83NGN. Livestock Feed began the year with a 1.39NGN share price and has gained 30.22%on the price valuation.
Livestock Feed rank 17th on the Nigerian stock exchange market in terms of year-to-date performance. They operate in the consumer goods sector, they have several market competitors engaged in the consumer goods sector, sectors like champion berries, Guinness Nigeria, Vitafoam Nigeria, honey well flour mill, ps Cusson Nigeria, and a host of others.
3. Champion Breweries PLC:
Like the name implies they are involved in brewing, bottling, and selling of none alcoholic drink and beer, their opening stock price is at N 1.98, day’s low and high price at N 2.10 The current price of trading at Champion berries is at N2.10, the Champion stock closes its last trading day on June 21 of 2021 at 2.10 NGN per stock on the Nigerian stock exchange market, recording an N6.06 gain over its previous price of 1.98.
They began the year with N 0.86 share price and has gained 144.19% on the price valuation, in terms of the year today’s performance they are ranked 4th on the Nigerian Stock Exchange market.
4. NEM Insurance PLC:
NEM insurance provides general and none life insurance services for both cooperate and none cooperate bodies, the company operates through two segments namely NEM insurance(Nigeria) plc and NEM insurance (Ghana) plc.
Their products and services includes extraneous/fire peril policy, consequential loss policy, burglary or housebreaking policy, fidelity guarantee policy, group personal accident policy e.t.c.
The company also provides oil and gas, Energy insurance with a focus in various areas such as mainstream, upstream risk and downstream risks, power, solid minerals, and also provides risks management services. The current share price is N 1.90. The NEM company is led by Adegboyega W Adedeji, they have a yearly gain of 157%.
5. First City Monument Bank (FCMB):
The First City Monument Bank has been able to please its stakeholders in the past few years with its impressive performance as the bank posted Q1, 21 profit before tax of N4.2 billion coupled with its recent payment of a dividend of N 2.97 billion translating to ordinary 15 kobos per ordinary share as at December 2020…
6. AIICO Insurance PLC:
They commenced operations in Nigeria in 1963 as an Agency Office of American Life Insurance Company, the company was incorporated, registered, and licensed in Nigeria. As American Life Insurance Company Limited, which after the federal government of Nigeria bought 60% stake it was renamed to American International insurance company limited.
It was later listed on the Nigerian Exchange stock market in 1990, after which both shareholders divested. It’s the best performing stock on the Nigeria stock exchange market, and it has continued what we can call a steady run, the stock has been on an upward swing since it came to public notice that they are raising N5.28 billion through a private placement subject only to shareholders approval.
This translates to a 20% above current price? Some corrections are bound to take place as investors take profit, even if the stock could go higher.
7. Access Bank:
Access Bank Plc (the Bank) is engaged in investment, corporate, commercial, and retail banking. The Bank’s principal activities include the provision of money market product and services, retail banking, granting of loans and advances, equipment leasing, corporate finance, and foreign exchange operations.
Access bank was one of the best when it comes to penny stocks, most banks tend to make money from the interest they charge customers on lending, commission, and investment in financial instruments. Of all the banks’ access bank has demonstrated its capacity to generate more returns on the retail lending space.
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On Monday, Access Bank Plc (ACCESS) closed at 8.55, -18.57% below its 52-week high of 10.50, set on Nov 13, 2020. Year on year Access Bank Plc had relatively flat revenues (750.63bn to 773.08bn), though the company grew net income 12.50% from 93.05bn to 104.68bn.
Some tips to pick Penny Stocks that will turn out great in the Nigerian Exchange Market are:
- Look for penny stocks with consistent growth.
- Choose a penny that has low debt capital below 0.5
- Avoid companies with high exposure to interest risk
- Compare the trends to current ratios and operations earnings to make sure they are growing in cash.
- Make sure their share price grows with their fundamental rights.