The Nigerian economy has been battling with high inflation rates over time and it reached 22.22% last month. However, this inflation rate didn't stop these 14 Nigerian Stocks from growing above their usual earnings that outshined even the country's current inflation rate.
These companies are a combination of different industries ranging from petroleum, petroleum products, livestock/animal specialties, insurance carriers, brokers and services, financial institutions, food products, beverages, personal/household products, building materials, banking, household durables, and hotels/lodging. And their ability to thrive and deliver massive performance in such an economy is something to look into.
Despite the challenges Nigeria as a country is facing, several factors have contributed to the massive gains of these stocks. Let's have a look at some key factors.
Picture of Nigeria stocks that rose despite high inflation
Observation From the 14 Stocks That Rose in May 2023
Concerning Industry Trends:
Petroleum and Petroleum Products Distributors: Conoil PLC and Totalenergies Marketing Nigeria PLC rose despite the high inflation rate because of an enormous demand for petroleum products, good pricing, and market stability which in turn benefited the companies making their stock rise despite a high inflation rate of 22.22%
Banking: Sterling Bank PLC, United Bank of Africa PLC, and Zenith Bank PLC have also been in the spotlight as stocks that experienced an increase despite the inflation rate affecting the country. The banking sectors experienced this because of technological advancements, increased financial inclusion, and improved risk management practices.
Food and Beverage: Cadbury Nigeria PLC and Nigerian Breweries settled on the hike in consumer demand for food and beverages.
Concerning Growth Opportunities:
Livestock/Animal Specialties: Livestock Feeds PLC's performance shows a robust focus on the agriculture sector, as the country is looking at possible measures in promoting self-sufficiency and enhancing food security. Livestock Feeds PLC's ability to harness the growing demands for animal feed and products related to its supply has brought impressive returns to the company.
Insurance: Axamansard Insurance PLC has shown resilience despite the economic challenges, profiting the company with the growing demand for insurance services and its possibility of managing risk.
Concerning Market Leadership:
Building Materials: Berger Paints PLC's huge performance can be attributed to its brand recognition, market leadership, and ability to keep up with the requests from consumers that use their construction and renovation materials.
Why Is It Necessary to Have Inflation-Beating Stocks?
Inflation-beating stocks are stocks that rose despite the inflation ravaging a system. Here in Nigeria, inflation-beating stocks have played a crucial role in trying to sustain the tides in the nation's economy.
When inflation hits a country, the value of their local currency experiences a decline and there's a hike in the purchasing power of individuals and businesses. In matters like this, stocks that outperform the nation's inflation become important for these reasons.
Firstly, inflation-beating stocks act as a support against the rising cost of goods and services. As lots of companies experience an increase in costs due to inflation, only those with pricing power and the ability to pass on higher costs to consumers can sustain their profitability.
Secondly, inflation-beating stocks tend to drive investor confidence and capital inflows. The moment investors see ways to grow and protect their wealth despite rising inflation, there’s a high chance of them investing in the stock market.
For a long time, inflation-beating stocks serve as the economy’s strength to hold despite inflationary pressures. Companies that have delivered huge returns despite inflation and economic downfalls show their strength which boosts fortunes on their ends.