Think back to the year Nigerians made obscene gains in the stock market. It’s 2008. The same year rated as the worst year investors have ever had. The power of greed was so great that it pushed stock prices beyond their true values.

Those who are knowledgeable and experienced reap the maximum benefits and exit the market. Others who were moved by the herd effect were not so lucky. They were stranded when prices collapsed. It was a painful experience for speculators. Statistics reveal that investors have lost close to 3.9 billion naira.

Now, the share prices in the Nigerian stock market look very attractive, but investors are very afraid to risk putting fresh funds into the market. The emotion of fear is really reigning now. Smart investors know that this is the right time to buy low and buy big. But, on what premise would you base your investment drive this time?

There is widespread concern about the global recession, the freezing of margin facilities by banks, the devaluation of the naira and the general slowdown in the economy. What criteria should you use to choose stocks in these difficult times as a forward-thinking investor?

That is the question I want to answer in this article.

Factors to consider

1. Historical stability

Companies with a track record of profitable performance over the years, barring unforeseen circumstances, will continue to improve best practices to make investors happy. Remember that First Bank some time ago took the risk of investing in the emerging communications market in Nigeria through ILL. That deal fell through, but the bank did not fail as a result. Years later, it continued to post favorable results, paying investors bond issues and dividends. Currently, this stock is the delight of investors. The first bank has been consistent over the years and has a strong reserve base.

2. Competitive advantage

Companies that outperform in the market over their competitors have a good chance of surviving this difficult time. Strong brands like Cadbury and UACN will continue to make waves in the market. Its products have permanently registered in the minds of consumers in Nigeria. These products will continue to be sold. They are even restructuring and introducing new products that consumers have been buying. The more people use these products, the greater the profitability with good management of human and material resources.

3. Solid financial foundation

Companies that have been accumulating reserves over the years from the profits made have something to fall back on in this bear season to finance projects that will add value to their markets and give investors a good return. UBA and GTB are financial powerhouses for the construction of reserves. The strong reserve base is largely responsible for its expansion into foreign markets. You can see pure gold here. When those foreign branches start to turn a profit, what do you think investors will enjoy? Good timing and high ROI of course, especially on the return of the bulls.

4. Highly profitable

Not all companies have the ability to manage resources well for maximum benefit. The fiscal management of certain institutions is so deficient that it deeply reduces their profit margin. In the banking industry, Oceanic Bank stands out in terms of prudent fiscal portfolio management. Making a profit is not all that matters. Having enough to keep is the skill investors love.

5. Very underrated

Stocks that are undervalued are the first to bounce in a bull market. You are not going to make a profit on the return of the bulls. Your profit margin is decided at the time of your investment. Taking the risk of investing when the company is undervalued guarantees high returns when the market recovers. Unity Bank currently enjoys an agricultural facility on loan terms from the World Bank. At a current market price of less than 3 naira, the shares are severely undervalued

Winning attitude for predictable profits

* Continue to be fully invested

* Invest in fundamentally sound stocks

* Ignore the economic forecast and be determined to excel in any economy. The stock market is always an outperformer in the long run and is the only solution to inflation when it comes to your money.

* Continue to acquire more financial and investment skills.

* Be less emotional in your decisions

Sectors and actions to take into account

1. Agriculture

This sector is on the rise as one of the major contributors to Nigeria’s gross domestic product and earnings. New frontiers in cocoa farming and processing are yielding positive results. Listed companies, for example, cocoa processor FTN, Livestock Feeds and Okomu Oil offer good prospects.

2. Food and drinks

Even in a recession, people will still demand food and their sweets. The logic of why this sector will work is simple. As long as man lives, the demand for food and drink will continue. Coupled with good management, companies in this sector such as Dangote Sugar, Tantalizer, Flour Mills and Honey Well will continue to delight investors by paying dividends.

3. Banking

Nigerian banks are currently aggressive in their drive to expand into Africa and beyond. Revenues and profits will soon start to show up on the balance sheet. Some banks, such as First Bank, UBA, GTB, Zenith and Bank PHB, have performed well and will continue to reward investors as bears reign.

4. Communications

Nigeria’s communications sector is one of the fastest growing in the world. Despite all the infrastructure challenges, companies operating in this sector have made obscene profits and investors will benefit most from their operations in 2009. Starcom is the only stock listed in this sector so far on the US stock market. Nigeria. Investing in it now will not be a bad idea.

5. Conglomerates

History is in favor of this sector. In particular, they have the ability to restructure and reshape their businesses in difficult times. A stock like the UACN will continue to delight investors

6. Transport

Talk about monopoly. ABC transporte is the only listed company in this sector on the stock market. It has been constant in paying dividends since it was listed in 2006.

7. Safe

The insurance industry is currently enjoying goodwill and patronage as investors continue to position themselves for long-term profit. Companies like International Energy Insurance and Cornerstone are very attractive.

Learn how to commit the majority of your available fund to the food and beverage sector to minimize your risk. Thinking long term is a surefire strategy that will ensure your success in 2009 and beyond.