I have spent the last few hours painfully going through summary indices of stocks. In a matter of days, I’ll have to place an order with the broker.
The fundamentals I have gone through have left me with very little conclusion to draw, so I’m torn between beefing up some of my holdings in two different stocks: one in the banking sector (GTBank) and the other in the insurance sector (Cornerstone Insurance).
The 6 months (June 2007) result for Cornerstone Insurance is quite impressive recording a profit after tax (PAT) increase of about 362% change compared with same period last year. The market price for Cornerstone closed shop today(July 30, 2007) at N4.04, inching up from N3.94 from last Friday's. GTB on the other hand with a reported 3 month period, has increased profit after tax by 66.14% when compared with same period last year; its closing price today is N32.95, down by some kobos from last Friday’s trade of N32.99. indeed both stocks have hovered around this price range in the last 1 month, with no particular spike in their prices.
So my decision would be what time range is my investment need for these stocks. Well, I have always considered these stocks as part of the portfolio of stocks I’ll like to keep for long term, so speculations only will not drive my drive decision for this month (medium or long term, I win!). Considering price differentials between both stocks, it is obvious I'll get more volumes purchasing Cornerstone as opposed to GTB, but really that shouldn't be the reason for committing my "hard" earned kobos!
But let's just assume that I want to pitch for a short to medium term play of these stocks, and my target return rate is say 50-75% ( I believe 100% is attainable, but let's not raise our hopes too much...ok?) in another 6-9 months, which of these stocks is more likely to give me this target? In essence, we are asking, is it possible to have GTB in the range of N50-N60 in 9 months time? Is it possible to have Cornerstone in the N6-N7 bracket in 9 months time? Well, considering the PAT of both companies mentioned earlier, it may not be so bad a pitch to make. While GTB's year high for 2007 has been N37.96, comparing with the price possibilities of its peers (Intercontinental, UBA and Zenith) in the market, N50 could be a possibility, N60 maybe a stretch for our chosen time period.
Cornerstone on the other hand has a year high of N4.99 from a year low of N0.90. So asking the stock to fork out additional N2-N3 gain in 9 months (some of its peers have attained such price levels this year already: Crusader 6.70, NEM Insurance 6.32, WAPIC 9.13, Great Nigeria Insurance 6.10 etc.) may not seem an impossible target considering an over 300% PAT rise for June 2007 result compared to June 2006...hmmm are you seeing where I'm leaning to already?
The truth be told, I'm a great fan of the GTB brand and stock, and always believe, you can never get it wrong investing in its stock as long as the management continues with its fundamental based style of operation and value creation. But in the light of the above mentioned (I hear an unsubstantiated rumour that they might be coming to the market for additional capital, let's see how that goes, of course, if they do, it's a "no-brainer"), I'll keep a tab on GTB for another month but pitch my tent with Cornerstone this month.
So I recommend we take a dive...Go for Cornerstone Insurance, medium to long term...you are fine!
Enjoy...
The fundamentals I have gone through have left me with very little conclusion to draw, so I’m torn between beefing up some of my holdings in two different stocks: one in the banking sector (GTBank) and the other in the insurance sector (Cornerstone Insurance).
The 6 months (June 2007) result for Cornerstone Insurance is quite impressive recording a profit after tax (PAT) increase of about 362% change compared with same period last year. The market price for Cornerstone closed shop today(July 30, 2007) at N4.04, inching up from N3.94 from last Friday's. GTB on the other hand with a reported 3 month period, has increased profit after tax by 66.14% when compared with same period last year; its closing price today is N32.95, down by some kobos from last Friday’s trade of N32.99. indeed both stocks have hovered around this price range in the last 1 month, with no particular spike in their prices.
So my decision would be what time range is my investment need for these stocks. Well, I have always considered these stocks as part of the portfolio of stocks I’ll like to keep for long term, so speculations only will not drive my drive decision for this month (medium or long term, I win!). Considering price differentials between both stocks, it is obvious I'll get more volumes purchasing Cornerstone as opposed to GTB, but really that shouldn't be the reason for committing my "hard" earned kobos!
But let's just assume that I want to pitch for a short to medium term play of these stocks, and my target return rate is say 50-75% ( I believe 100% is attainable, but let's not raise our hopes too much...ok?) in another 6-9 months, which of these stocks is more likely to give me this target? In essence, we are asking, is it possible to have GTB in the range of N50-N60 in 9 months time? Is it possible to have Cornerstone in the N6-N7 bracket in 9 months time? Well, considering the PAT of both companies mentioned earlier, it may not be so bad a pitch to make. While GTB's year high for 2007 has been N37.96, comparing with the price possibilities of its peers (Intercontinental, UBA and Zenith) in the market, N50 could be a possibility, N60 maybe a stretch for our chosen time period.
Cornerstone on the other hand has a year high of N4.99 from a year low of N0.90. So asking the stock to fork out additional N2-N3 gain in 9 months (some of its peers have attained such price levels this year already: Crusader 6.70, NEM Insurance 6.32, WAPIC 9.13, Great Nigeria Insurance 6.10 etc.) may not seem an impossible target considering an over 300% PAT rise for June 2007 result compared to June 2006...hmmm are you seeing where I'm leaning to already?
The truth be told, I'm a great fan of the GTB brand and stock, and always believe, you can never get it wrong investing in its stock as long as the management continues with its fundamental based style of operation and value creation. But in the light of the above mentioned (I hear an unsubstantiated rumour that they might be coming to the market for additional capital, let's see how that goes, of course, if they do, it's a "no-brainer"), I'll keep a tab on GTB for another month but pitch my tent with Cornerstone this month.
So I recommend we take a dive...Go for Cornerstone Insurance, medium to long term...you are fine!
Enjoy...
4 comments:
Gbos, this is good! i really enjoyed the article and it aided my investment decision.keep up the good work but please update regularly.
Bros, what's ur take on this new CBN policy of strengthening the naira? I want to agree Prof Soludo sure knows what he's doing anyways, but as I'm no Economist, I cant really see the clear pix... I've read some articles implying we return to "Pre-SAP" era, but not really sure. Do you mind giving an expose on this...? Saludos!
Good for people to know.
Good day, sun shines!
There have been times of troubles when I didn't know about opportunities of getting high yields on investments. I was a dump and downright stupid person.
I have never imagined that there weren't any need in large initial investment.
Now, I feel good, I begin take up real income.
It's all about how to select a proper companion who uses your money in a right way - that is incorporate it in real business, and shares the income with me.
You may ask, if there are such firms? I have to answer the truth, YES, there are. Please be informed of one of them:
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