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UAC EMERGES STOCK OF THE WEEK AS MARKET RECORDED BULLISH TREND
July 20, 2007

UAC of Nigeria Plc last week emerged the stock of the week on the Nigerian Stock Exchange (NSE) as the performance indicators, the All-share Index and market capitalization both recorded significant appreciation.

Particularly, the index which opened the week at 51,470.07 points rose by 0.1% to close at 51.514.06 points while the capitalization closed at N 7.95 trillion appreciating by 1.42% from N 7.84 trillion at which it opened.

Analysts attribute the rise in the performance indices to the conclusion of the First Bank of Nigeria Plc's hybrid offer. Following the conclusion of the offer, idle funds in the hands of investors were channeled to the secondary market, causing the prices of certain blue chip stocks to rise due to the interest they got from investors.

UACN emerged as the stock of the week because it recorded the least P.E Ratio among all the companies that appeared on the price gainers chart for the week under review. A low P.E Ratio means that investors are likely to recoup their investment in a shorter period. What this means is that, those who want to buy into a stock with the aim of recouping their investment in a shorter period and almost make huge profit in a very short time will have that opportunity in a stock like UAC of Nigeria Plc.

UAC of Nigeria Plc is often referred to by market analysts as one of the 'grandfather stocks' following the number of years it has been in operation in the country and its operational activities. The company has a good track record of consistent dividend pay out and impressive financial performance.

The company has subsidiaries in almost all the sector of the economy which has consistently been contributing to the improvement recorded in its bottom line over the years.

Recently, the company rewarded its shareholders with a dividend of N 1.00, giving them hope of a better performance in the coming year. Another factor which may be responsible for investors' interest in the shares is the growth prospect of its share price. The Lowest price of the company's share this year was N 25.70 per share while the highest price this year was N 40.19 per share. Its current market price is N 32.00 per share.

This is interesting to investors because what this means is that the price can still rise to N 40.19 and beyond. However, as it is the trend in the market, its share price will start to drop, once the dividend warrant is dispatched as shareholders will start to sell off their holdings in the company. Nevertheless, it is expected that the drop will not be much, due to the high esteem at which investors attach to the stock.

Culled from Vanguard Stock Watch
Written by Michael Eboh