HIGHLY rated independent investment advisory firms have picked Fidelity Bank as a very attractive stock with the potential to generate high returns for investors.
Independent investment research reports by many market pundits reviewed at the weekend showed that Fidelity Bank was assigned a “buy” ticker, a recommendation to investors to consider the bank’s potentially attractive returns.
The research reports were based on the bank’s historical and current operational performances and the clear-sighted implementation of the bank’s growth plan. The reports also considered the quality of the board and management and the bank’s general human capital and resources.
The investment advisory reports included those of Afrinvest Group, FSDH Capital and CardinalStone.
Analysts were unanimous that Fidelity Bank’s share price could double in the period ahead, given a professional assessment of top traditional performance parameters, including the company’s operational reports, investors’ preferences, and projections.
CardinalStone stated that Fidelity Bank’s share price could double, citing the bank’s “robust earnings growth” and the increasing profitability of its core banking operations.
After an extensive review of the global and domestic stock markets, FSDH Capital selected Fidelity Bank as one of the “FSDH Top Picks,” a group of stocks that the investment advisory firm considered to be most attractive for discerning investors. FSDH Capital’s stock selection considered a stock’s pricing history, dividend history, fundamental values, and peer ratios, among other factors.
Providing background on analysts’ exhaustive research for stock selection, Afrinvest explained that the company’s fair value estimate “takes into account a weighted average of price estimates derived from a blend of valuation methodologies including the Discounted Cash Flow (DCF) and its variants as well as other relative and comparable trading multiples valuation models”.
“However, we attach the most weight to DCF valuation methodology, particularly the Dividend Discount Model (DDM), Free Cash Flow (FCF) model and Residual Income Valuation/Model (RIV/RIM). The utilisation of comparable trading multiples is guided by the analysts’ understanding of the banks’ fundamentals and key price drivers from the firm, industry and macroeconomic perspectives,” Afrinvest stated.
According to analysts, the “buy” rating implies that “the expected total return over the next 12 months is 25 per cent or more. Investors are advised to take positions at the prevailing market price as at the report date”.
Afrinvest projected that Fidelity Bank, with a dividend yield of 9.3 per cent, has a price upside potential of more than 35 per cent. This effectively makes the stock an inflation-hedging stock, implying that investors in the bank’s shares can retain money value despite the current inflationary environment.
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