📊Our Stock Picks for the Week
Alchemy! The gold spinning venture fueled by magic and confined to the pages of novels set in ancient times. Not anymore. The “meme coin” (Dogecoin) is proving just as prolific, posting a remarkable 12,955% YTD performance. Cryptocurrency enthusiasts also have the complements of Ethereum’s recent record highs to brag about, on any league table of returns this year. The results are so confounding that even Dogecoin’s promoter preached a message of caution amid the highly speculative trading on the digital coin.
Global investment banking outfit, Goldman Sachs too has found a place for crypto in its product suite. The Bank disclosed successful structuring of two bitcoin-linked derivatives products in the week. The future of blockchain technology also shone brighter with the first-ever bond issuance program built on Ether successfully debuting in the last week of April. Right now, anything seems possible.
Other asset classes are playing catch-up. Crude oil markets suffered a loss of momentum as coronavirus transmission in India trims oil demand from the world's third-largest importer of the product. Developed market equities and metals on the other hand, have strong economic data points from the US, EU, and China to thank for a purple patch of their own. Manufacturing activities are almost back to pre-pandemic levels and GDP in the US is estimated to reach pre-pandemic levels as early as this quarter. Gold climbed above $1800/ounce for the first time in 3 months while Aluminum and Iron ore have seen decent rallies. Copper notched new highs to close the week at $4.73/Pound, to give a very bullish color to financial markets this week. The divergence of economic recovery worldwide, however, remains a concern with poor African countries, particularly in focus.
Here at home, the NGX ASI dipped in 3 of the 4 trading days. Earnings season continues, with MTN reporting sales growth of 17.1% year on year as revenues hit N385Bn in Q1 2021; The telecommunications giant’s digital business line doubled in size year-on-year (101%), while voice and data business lines contributed 91% to the revenue accrued. Profit after tax (PAT) increased by 42.5% reinforcing the fact that MTN remains a viable stock pick.
The Banking and Industrial goods sector clinch the top spots on our watchlist this week on the back of sell pressure in DangCem and sideways trading on the banking index. We advise some bargain hunting in the stock markets as we see cheaper valuations in fundamentally sound stocks notably the Banking tickers. We encourage investors to have a strategic long-time investment allocation and not to despise short-term tactical allocations as they appear. Till next week keep investing wisely and say no to fictitious ROI investment schemes coming to a WhatsApp group near you.
(Valuation is based on 7th May 2021 closing prices)
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