Build up to 2023 elections: Why investors should embrace low price stocks with strong fundamentals – Nairametrics

The equities benchmark index in Africa’s largest economy has remained below 50,000 index points to close trading at 49,421.91 points on September 21, 2022, as the build-up to the 2023 elections kept foreign investors at bay and sell-offs by domestic investors deepen. 
The ASI rose to as high as 54.085.30 on May 27, 2022, but has in the past four months dropped by 4,663.39 basis points or 8.62%. 
Statistics obtained by Nairametrics showed that activities on the Nigerian Exchange, which opened the month at N26.880 trillion in market capitalisation and 49,836.51 in index at the beginning of trading on September 1, 2022, closed on September 21, 2022 at N26.657 trillion and 49,421.91 index points, hence has earned a loss of about N223 billion or 083% during the review period. 
According to market analysts, despite the downturn being witnessed on the capital market, the equities market presents attractive opportunities for investors in the form of capital appreciation and dividend return, given the low yield environment in the fixed income space. 
Also, most of the stocks are still currently undervalued and present an opportunity for growth in the short to medium term. That’s why stakeholders believe this is the right time to take position on some quoted stocks that have strong fundamentals. 
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For instance, Nairametrics recently tracked some Nigerian bank stocks with the lowest price-earnings (PE) ratios, according to data compiled by Bloomberg, which buttressed the point that most of the stocks quoted on the Exchange have good opportunities in the value investing space. 
The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). 
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The P/E ratio helps investors determine whether a stock is overvalued or undervalued. A high P/E could mean that a stock’s price is high relative to earnings and possibly overvalued. Conversely, a low P/E might indicate that the current stock price is low relative to earnings. 
The current low prices of stocks present investors opportunity to respond to expert advice that in the event of every meltdown in the prices of shares, what investors need to do is to reposition in the face of losses in the prices of shares, where to invest in the market despite recurrent losses in recent times so as to gain in the long run. 

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© 2022 Nairametrics
© 2022 Nairametrics


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