From N7 In January To N90 In November, This Stock Has Returned 816% This Year!!!

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Wonders never seem to stop happening in the Nigerian Stock Exchange. Forte Oil is one wonder stock that hasn’t stopped performing miracles. It has a one year return of 816% and has risen from N7.73 to N95 as at Nov 7. Currently it has a relative strength index of above 70x and indication that it has oversold, yet it is still rising.  Just back in October 15 (under a month ago) I wrote that he stock appeared over sold at N52 yet the astronomic rise continues.

In terms of fundamentals, Forte Oil has shown improvements in results this year with pre-tax profits rising 258% this year alone. However, operating profits which is a better indicator has risen only 9% as seen in their 9 months results this year compared to 2012. The 258% increase was as a result of income from other sources which are not likely to occur again.

Surely growth investors love stocks like this and would have made a lot of money by taking positions and exiting. But as is typically the case, you never know when the bubble will burst. Value Investors need not worry about bubbles, that is why we don’t follow the crowd. Chin up!!