Semi-Annual Market Report: Best Performing Stocks

Diversification is the art when it comes to investing in securities. Diversification helps shield an investor from risks. The idea is to have stocks that are gaining in your basket to cover the losing stocks because we all have that one stock that is shedding value. But sometimes a perfect scenario can play out; all your stocks can gain. We bring you the top 10 gainers this year.

Kakuzi

This is a listed Agricultural firm which has recorded the largest share price gain in the past seven months. Kakuzi share price has risen from KES 180 in January 2015 to trade at KES 297 reflecting a 65% increase which was the highest in the Nairobi Security Exchange.

Because of the diversified nature of Kakuzi ltd, i.e. the focus on mixed agricultural portfolio, the company is able to mitigate the profit cycle risk. There has been increased demand for the stock against limited supply. This is due to the expected increase in international tea prices by the investors

Continuing focus on a mixed agricultural portfolio to mitigate the profit cycle risk to which agriculture has historically been subject to.

Developing macadamia nut production which will add scale and customer service to parent company’s existing operations in Malawi and South Africa, is a key strategic thrust according to the company and we couldn’t agree more.

Crown Paints

This was the second top gainer this year having registered on the counter a gain of 48% at the end of the semi-year to rest at KES 164.

The company has a wide product range which constitutes a variety of paint products. The company has been able to provide competitive edge to its products by ensuring product differentiation.

The High operating expenses incurred on its regional expansion drive pulled down the paints manufacturer’s earnings, but the announcement of a bonus issue last Month set investors searching for the stock.

The company also has a large product range which constitutes a variety of paint products. The company has been able to provide competitive edge to its products by ensuring product differentiation.

The credit for the success of the company in consistently retaining its NUMBER ONE position having a 65% market share in the Kenyan decorative market over the past 50 years goes to the totally dedicated and committed 1,500 CROWN DEALERS & CUSTOMERS.

The company has been blessed with a divine team of directors, senior management and the most important employees who have been working hard to help the company sustain its position as the most leading player.

The last financial year saw the company issue share splits instead of dividends to its shareholders and this has contributed to the company position in the market as more shares were retained.

Sasini Tea and Coffee

Sasini was among the top gaining stock in the semi annual results released registering on the counter gain of 24% to rest at KES 15.95. Though the semi -annual results saw a decrease in profit in operating activities to a loss after tax of Ksh. 51.9 Million Compared to profit of 39.7Million in the same period in the previous year.

The stock gain has been contributed by the expected increase in international tea price and the subsequent increase in demand for the stock.

Limuru Tea Co.

It’s a company involved in tea farming and production. The semi -annual results show the stock price has gained by 23% in the last six months to rest at KES 950.

The increase in share price was contributed by the increasing demand for Tea. On 12^th may saw the company issue share split in the ratio of 1 for 2. The share split will not only increase the number of shares issued but also the cost.

Jubilee Insurance Co.

This is the largest insurance company in East Africa offering diversified insurance commodities. The company reported an increase in share price of 23% to emerge among top gaining companies.  The company has grown in every aspect from pre -tax profits to gross premiums earned.

The Company’s strategy of diversifying its investment and asset base provided an impressive investment income growth and this increase demand for its shares. Also the Jubilee’s business and product development strategy which designed around innovation and technology has seen the stock growth.

Marshalls (E.A)

This is a principally engaged in the assembly, sale and service of motor vehicles. Sale of goods is recognized in the period, in which the Company delivers products to the customers, the customer has accepted the products and collectability of the related receivables are assured. Sale of services are recognized in the period, in which the services rendered are completed.

The stock price of marshall E.A has grown by 21% to showing ending price of KES 11.9. This has been contributed by the company

Kenya Power & Lighting

This is and electrical utility company responsible for the development and maintenance of the electricity transmission and distribution network in Kenya.  Investing in Kenya power shares will ensure growth of your shares as the company shares have been on demand in the market.

They do not have a competitors and their market is ever increasing. As it stands, they cannot even meet their demand. As an investor, you want to invest in a company with a high demand, not just high supply.

The cost of power installation has recently been reduced and that means that more people will be connected to the grid. For Kenya Power, that means more bills. For its shareholders, that’s more value.

Safaricom Limited

This company is the largest network providers in Kenya. The company has evolved from just offering mobile phone services to offering financial solutions. M-Pesa was a market hit and M-Shwari is causing the banking sector all sorts of problems in the race to reach the unbanked population.

With profits souring, you expect demand to increase and push the price further up. That was the case for Safaricom. Safaricom’s net profit rose by 38pc to record a staggering Sh32bn. Their customer base customer base grew by eight per cent to 23.3 million, about half the country.

With M-Pesa firmly established in the Kenyan culture and internet access improving, the communication giant has established itself in the market, not just the communications market but also the financial markets.

Eveready EA

Eveready EA is said to be one of the largest battery factories in Africa with a capacity of over 200 million pakapower batteries annually and a workforce of about 250 people. They also have one of the best distribution systems in the East Africa and a very powerful brand.

The economy of scale, brand value and goodwill has been instrumental in their long term success.

Last year the company made a deliberate decision made to close their plant in Nakuru which was making loses. This has allowed them to cut unnecessary cost and finally break even and record profits. Eveready’s shareholders also allowed the management to sell idle equipment at the closed factory in Nakuru. They also agreed to partner with Orbit Chemicals to create a joint 50-50 manufacturing venture. Investors are looking up to an interesting future with the company with all these developments even after the company recorded losses.

Unga Group

Founded in the 1900s, Unga group is a holding company based in Kenya with two business segments; Consumer, and Animal Nutrition and Health. It has flour mills in Eldoret, Nakuru and Mombasa.

Last year saw the company top its industry segment by recording a 111pc surge and they look to continue their dominance this year. This company is driven by the local market. Kenyans love their unga and investors love their Unga group. Analysts considered the stock undervalued last year based on its price to earnings ratio (P/E) in comparison to the industrial average.

Earlier this year, the company announced a pre-tax profit increase by 59%. This was attributed to the company’s increased capacity after the brought new wheat mill and the sale of its stake in Bullpark Ltd. The company however said that manufacturing overhead and competitive pressure remained high. It remains to be seen how the weak East African currencies compared to the dollar will impact its results. Foreign exchange risk impacts the company’s financial results.

However, with earnings per share jumping from 1.96 shillings to 3.41 shillings, the demand is rising and the price will keep going up.

Imagine, just imagine, having a portfolio of the 10 stocks listed above.  It will be a great thrill investing in this portfolio watching the value of your investment climb week by week. This means as an investor you earn both from the dividends based on the company policy and capital gain because of the reduced volatility. Your downside risk will be none as all the securities in your portfolio will be gaining and most risks have been diversified.  What else would you be looking for?

(Images: Courtesy of Wazua)