5 Blue-chip Stocks That Beat Nigeria’s 2022 Inflation Rate

In 2022, Nigeria experienced historic inflation, with the rate closing in November at 21.47 per cent, the highest level in 17 years. Within 11 months, inflation soared by 37.6 per cent, having posted a 15.6 per cent rate in January 2022.

This eroded the value of the naira for many Nigerians who locked their money away in commercial banks’ vault or kept it under a pillow or mattress.

During that period, even investors who looked to cryptocurrency poster coin, Bitcoin, to hedge inflation couldn’t escape the onslaught, suffering a -63.9 per cent loss on investment last year.  

However, when the naira failed to withstand the pressure from inflation and bitcoin succumbed to the onslaught last year, some big chip companies in the stock market acted as a store of value, safeguarding the investment in their possession.

Prime Business Africa’s stock market analysis showed persons who had their money locked away in blue-chip assets in the equity market were able to beat inflation in 2022. 

Five big blue-chip stocks that beat 2022 inflation rate

• Wema Bank

Investors that held Wema Bank stock between January to December 2022 saw their investment in the lender’s shares rise by 413.1 per cent in value. 

The company posted one of, if not, the highest growth in investment value last year in the capital market after its share price ended 2022 with N3.90 kobo, significantly above the N0.76 kobo it started last year with. 

As a result of the 413.1 per cent growth in investment value, shareholders pocketed a combined N40.37 billion. 

This indicated investment in Wema Bank was the perfect store of value for investors looking to escape inflation’s onslaught. 

• Airtel Africa 

Individuals or investors who chose Airtel Africa as their store of value at the start of the first quarter (Q1) saw their savings or investment in the firm’s stock rise by 71.20 per cent last year. 

Airtel’s stock price opened in January 2022 at N955 per share, but closed the same year with N1,465.18 per share, as demand for the firm among capital market investors soared, driving the value of its share up. 

The 71.20 per cent rise in investors’ investment value in Airtel surpassed the 37.6 per cent growth in inflation. This means investors not only went home with their principal investment intact, but they also recorded profit on investment. 

At the end of the year, Airtel Africa’s shareholders recorded a combined N2.55 trillion return on investment within 12 months. 

• Seplat 

Seplat ended last year on the list of stocks that helped investors hedge inflation in 2022, after its stock price rose on the back of the bulls to N1,100 per share at the end of December 2022, from N650 at the start of the same year. 

Analysis showed that the increase in Seplat’s share value earned investors a 69.2 per cent return on investment within 12 months. 

This increase translates to ₦264.80 billion gain for investors that held the oil and gas company’s stock from January to December last year. 

The long position paid off for the shareholders last year, as the appreciation in investment value was about double of inflation growth. 

• BUA Cement 

If you had bought BUA Cement stock at N67.05 per share in January 2022, you would have been one of the shareholders at the company that gained from the N1.03 trillion return on investment. 

Investors who acquired the firm’s share at the start of last year had a lot to celebrate at the end of December 2022, as their investment grew in value by 45.78 per cent. 

The cement manufacturer’s asset jumped by 45.78 per cent in value within 12 months, protecting shareholders’ investment from inflation that almost rendered the naira worthless in the global market. 

Prime Business Africa observed that the growth also helped BUA Cement retain its position as the fourth most valuable company in Nigeria. 

• BUA Foods 

BUA Foods followed the same growth path as its sister company, BUA Cement, last year, after increasing shareholders’ investment by 47.7 per cent between January to December. 

The growth handed shareholders N378 billion to share within 12 months, thanks to renewed interest in BUA Foods’ shares among the capital market investors. 

BUA Foods, the fifth most valuable company in Nigeria helped investors in the equity market hedge inflation with the backing of the bulls that kept the bears away from the equity.

Side note: Before you invest in these stocks due to their return on investment, last year, note that going into 2023, these assets’ growth also put investment at risk, as profit-takers could turn their sight on the equities. So, trade with caution.