What are the five major questions to ask before choosing a Stock on NGX to buy?
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For a 3-year lock on NGX, you don't pick a stock because you like the name. You pick it because it answers these 5 questions well — especially after what you saw with Stanbic's scrip dividend. 1. Does this company actually make real, consistent profit in Nigeria? Is revenue growing year-on-year, orRead more
For a 3-year lock on NGX, you don’t pick a stock because you like the name. You pick it because it answers these 5 questions well — especially after what you saw with Stanbic’s scrip dividend.
1. Does this company actually make real, consistent profit in Nigeria?
Is revenue growing year-on-year, or just one-off FX gain?
Is it profitable even when naira is weak and inflation is high?
Check: Audited financials on NGX website — look for PAT, not just turnover.
Why it matters for you: A company that can’t make profit can’t pay that ₦4.50 dividend or offer scrip shares.
2. Is management shareholder-friendly?
Does it pay dividends regularly? What is dividend yield vs Treasury Bills?
Does it offer scrip dividend options like Stanbic IBTC just did — so you can compound?
Is there high insider trading or related-party transactions?
Quick check: Look at its corporate actions history on NGX for last 5 years. Companies like GTCO, Zenith, Dangote Cement, BUA Cement have consistent dividend culture.
3. How expensive is the share right now?
What is its P/E ratio compared to its sector? (Banks average ∼3-6x in Nigeria)
What is P/B ratio? Is market price far above book value?
For your ₦159.86 Stanbic example — that reference price is what they think is fair. Is current market price above or below it?
Rule: Good company at bad price is still a bad investment for 3 years.
4. Can it survive debt and regulatory shocks?
What is its debt-to-equity? Highly indebted companies crash when CBN raises MPR to 26-27%
Is it in a sector heavily regulated? (Banks — CBN recapitalization, Oil & gas — subsidy, Dangote Refinery impact)
Does it generate cash, not just accounting profit? Check cash flow statement.
This is why many 3-year investors prefer banks with strong CAR and FMCGs with low debt.
5. What will make this stock grow in the next 3 years specifically?
Will Dangote Refinery benefit it (e.g., TotalEnergies, Conoil, MRS get cheaper supply) or hurt it?
Will CBN recapitalization force it to raise more shares (dilution)?
Is there expansion — new plant, new licenses, branch growth?
If you can’t explain in one sentence why this stock should be worth more in 2029 than today, don’t buy it. Thank you
See lessOnce upon a time in the bustling city of Lagos, there was a young man named Chinedu who wanted to invest in stocks on the Nigerian Exchange (NGX). As Chinedu sat down to make his investment decision, he realized there were five major questions he needed to ask before choosing which stock to buy. 1.Read more
Once upon a time in the bustling city of Lagos, there was a young man named Chinedu who wanted to invest in stocks on the Nigerian Exchange (NGX). As Chinedu sat down to make his investment decision, he realized there were five major questions he needed to ask before choosing which stock to buy.
1. “What is my goal for investing in this stock?”
Chinedu first thought about why he wanted to invest in stocks. Was it to save for his future, build wealth over time, or achieve financial independence? By knowing his goal, Chinedu could make a more informed decision on which stock to buy.
2. “How much risk can I handle?”
Chinedu understood that investing in stocks comes with risks. He thought about how comfortable he would be if the stock’s value fluctuated. Understanding his risk tolerance helped Chinedu choose a stock that aligned with his comfort level.
3. “Is this stock from a company I believe in?”
Chinedu considered whether the company behind the stock was one he believed in. He looked at the company’s history, products, and reputation to assess if it was a good long-term investment.
4. “What are the potential returns and dividends?”
Chinedu wanted to know what returns he could potentially earn from the stock. He also considered if the company paid dividends, as this could provide him with additional income.
5. “Am I buying this stock at a fair price?”
Before making his final decision, Chinedu checked if the stock’s current price was reasonable based on the company’s performance and future prospects. He wanted to ensure he was not overpaying for the stock.
As Chinedu pondered these questions, he felt more confident in his investment decision. By taking the time to understand his goals, risk tolerance, beliefs in the company, potential returns, and the stock’s price, Chinedu was ready to choose a stock on the NGX that aligned with his financial aspirations.
And so, armed with this newfound knowledge, Chinedu took his first step into the exciting world of stock investing, eager to watch his investment grow over time.
Remember, just like Chinedu, asking these five important questions can help you make informed decisions when choosing which stock to buy on the Nigerian Exchange (NGX). Happy investing!
See lessWel understood. Thank you Mama Ngozi (smiles). Nma dalu o. No zi iheoma. Translation: Mother, thank you. Take good care of your self.
Wel understood. Thank you Mama Ngozi (smiles).
See lessNma dalu o. No zi iheoma.
Translation: Mother, thank you. Take good care of your self.
Before buying any stock, I would first look at the company's financial performance, management, and future growth potential. I would want to know whether the company makes consistent profits, manages its debts well, and has a good reputation. I would also consider the risks involved, its dividend hiRead more
Before buying any stock, I would first look at the company’s financial performance, management, and future growth potential. I would want to know whether the company makes consistent profits, manages its debts well, and has a good reputation. I would also consider the risks involved, its dividend history, and whether the share price is reasonable compared with the company’s actual value. My goal would be to invest in a strong business that can grow sustainably over time, rather than chase quick profits. Although no one can predict the market perfectly, careful research and patience can help me make better investment decisions.
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