How young Nigerians can build wealth through smart stock choices

As Nigeria’s economy slows down and stock prices rise, investors are now asking where to find real value.

After two years of high inflation and tight monetary policy, the economy is beginning to cool, entering a period of disinflation where prices are still rising, but at a slower pace.

The Central Bank of Nigeria (CBN) has started cutting interest rates, which means returns on fixed-income investments like treasury bills and bonds are expected to decline.

As a result, investors are gradually turning their attention back to the stock market, where new opportunities are emerging.

The ongoing recapitalization of Nigeria’s banking sector is strengthening the financial system.

Banks are expected to inject over ₦4 trillion into the economy, which is improving liquidity and boosting investor confidence.

The planned recapitalization of the insurance sector is also expected to strengthen that industry, while a more stable foreign exchange market has reduced the heavy FX losses that hurt company profits between 2023 and 2024.

Many listed companies are now reporting higher profit margins and better overall performance.

The Nigerian Exchange (NGX) reflects this renewed investor optimism. As of October 14, 2025, the All-Share Index had risen by 43.6% since the beginning of the year, and the total market capitalization had reached ₦93.77 trillion.

With such growth, the next big question for investors is how to choose the right Nigerian stocks in 2025.

When choosing stocks, one of the most important factors is liquidity. Liquidity simply means how easily a stock can be bought or sold without affecting its price too much. It is safer to invest in companies whose shares are actively traded because they allow for easy entry and exit.

A good guide is to focus on companies that trade an average of at least 20 million shares per month over the past three months.

Companies such as FCMB, Universal Insurance, Linkage Assurance, Fidelity Bank, Access Holdings, AIICO Insurance, Zenith Bank, and UBA are among the most actively traded on the NGX, each recording an average of over 500 million shares traded monthly.

After confirming liquidity, the next step is to define your investment objective. Every investor should understand the purpose of buying a particular stock whether it is for growth, regular income, or value.

Investors seeking growth should focus on companies that have consistently increased profits, even during tough economic times.

A good benchmark is a compound annual profit growth rate (CAGR) of at least 30% over the past five years.

Many banks have achieved even higher growth, averaging around 63% profit growth in the last five years, with Wema Bank growing profits by more than 100% annually.

Agricultural companies such as Okomu Oil and Presco Plc have also shown strong performance, with average profit growth of about 64% per year, making them attractive to investors who want both growth and tradability.

For investors who want regular income rather than rapid growth, companies that pay consistent dividends are ideal.

Mature, cash-rich firms such as Seplat Energy, Okomu Oil, Presco, Dangote Cement, Aradel, and BUA Foods have a record of steady dividend payments. Banking stocks also offer both good dividend yields and liquidity, making them a strong option for income-focused investors.

Value investors, on the other hand, look for companies whose share prices are lower than their true worth. The goal is to buy quality stocks at a discount and benefit as their value becomes recognized by the market.

The best way to identify such opportunities is to find companies with low price-to-earnings (P/E) ratios and strong profit growth. However, even stocks with higher P/E ratios can represent good value if their earnings are rising fast.

For example, BUA Foods trades at 28 times earnings, which may seem high, but with a profit growth rate of more than 70% and strong dividend payouts, it remains an attractive long-term investment.

Combining liquidity, growth, income, and value considerations might seem complicated at first, but doing so helps investors reduce risk and increase potential returns.

Those who prefer not to manage this process alone can seek advice from a trusted financial adviser.

Some of the stocks that meet these combined criteria include FCMB, Zenith Bank, GTCO, UBA, Access Holdings, and Fidelity Bank in the banking sector; Okomu Oil and Presco Plc in agriculture; and Seplat Energy, BUA Foods, and Dangote Cement in other industries.

These companies offer a solid mix of liquidity, profitability, and long-term value, making them reliable options for investors in 2025.

By paying attention to these practical factors, investors can choose Nigerian stocks that are easy to trade, profitable, and positioned for steady growth in the years ahead.

Source: Nairametrics