The 10 Best African Stocks of 2012

Nigerian companies dominate this year’s list of the best-performing stocks in frontier Africa. In fact, domination may be an understatement. First, second, and third place all went to Nigerian stocks, and all but four of 2012’s 10 biggest gainers hail from Africa’s most populous nation.

Here’s a list of the Sub-Saharan stocks (not including South Africa) that have gained the most in US dollar terms since the start of the year.

Nigerian companies dominate this year’s list of the best-performing stocks in frontier Africa. In fact, domination may be an understatement. First, second, and third place all went to Nigerian stocks, and all but four of 2012’s 10 biggest gainers hail from Africa’s most populous nation.

Here’s a list of the Sub-Saharan stocks (not including South Africa) that have gained the most in US dollar terms since the start of the year.

(Note that performance was measured as of December 14, 2012, and each stock has averaged trade volume greater than $10,000 per day over the past 30 days. I excluded less liquid firms from the list.)

10. Ghana Oil +78.2% (Ghana)

Ghana Oil (GOIL) isn’t directly involved in offshore oil drilling along the Gold Coast, but it does operate Ghana’s second largest network of gas stations. Thus, the rising incomes of Ghanaian consumers mean increased fuel purchased at the pump and more cash spent on snacks at GOIL’s mini-markets.

The company opened five new filling stations this year; expanded its aviation fuel business; and increased its sales to the shipping industry. The moves paid off handsomely. Operating income for the first nine months of 2012 surged 28%, and investors took note. The stock now sports a trailing PE ratio of 14.2.

9. United Bank for Africa +78.5% (Nigeria)

Pan-African bank, UBA, rewarded its investors handsomely this year. The Nigeria-based lender now operates in 19 countries across the continent and has grown profits by 461% during the first three quarters of 2012.

How did it do it? By writing off fewer loans than the previous year and through some profitable currency trading. While this isn’t bad news, it would be nice to see more growth in loans and deposits, both of which are growing rather anemically.

8. Bralirwa +83.5% (Rwanda)

Rwanda’s largest brewery poured out profits in 2012 by selling more beer and at higher prices. Net income soared 45% during the first half of the year on a 22% increase in sales and a substantially reduced interest burden.

The company, which also holds the license to bottle and distribute Coca-Cola products in the country, is investing heavily in future growth. It recently added a new bottling line to its soft drinks plant, upgraded its brewery, and nearly doubled its fleet of delivery trucks.

7. Access Bank +90.7% (Nigeria)

Access Bank posted some eye-popping earnings figures this year. Over the first nine months, net interest income jumped 67%, fee and commission income increased 19%, and earnings per share more than doubled.

Photo by Steve Garvie

Loan and deposit growth, however, has been pretty stagnant, so 2013’s profits probably won’t be as impressive. But with its shares trading at just 5.6x trailing earnings, even nominal earnings growth could make this upstart bank a darling of Nigeria investors this year, too.

6. British American Tobacco – Kenya +98.4% (Kenya)

East Africa’s largest cigarette manufacturer and tobacco-grower, BAT Kenya, lit it up this year thanks to a big increase in profitability (and its dividend payout). In the first half of 2012, the company grew operating profits 24% by keeping overhead costs in check. It also boosted capital expenditure in an effort to lift production.

5. GlaxoSmithKline Consumer Nigeria +98.7% (Nigeria)

After growing earnings 12% over the first nine months of 2012, GSK announced that it would up its stake in its Nigerian subsidiary from 45% to 80% at a price of NGN48 per stub. The Nigerian Stock Exchange requires that at least 20% of all firms’ shares be listed on the exchange.

It was a big vote of confidence in the company, which has enjoyed 21% growth in sales of consumer healthcare goods over the past four years.

4. Uchumi Supermarket +150.8% (Kenya)

Quite the redemption story, Kenya’s star stock this year was a Kenyan grocer that, just a few short years ago, went bankrupt and was delisted from the Nairobi Securities Exchange. Now, the company is back, and while its share price has been volatile, investors are bullish about the company’s expansion into Tanzania and Uganda. They were also intrigued by a new dividend payout.

If the company is to continue its outperformance, it’s got some high expectations to meet. Uchumi will need to justify its PE ratio of 19 with improved growth in EPS.

3. Diamond Bank +158.4% (Nigeria)

After posting a loss in 2011, Diamond Bank put up great numbers in 2012. Over the first nine months, management more than doubled operating profits, and investors obviously liked what they saw. Even after its 158% US dollar gain, however, the stocks still trades at just 4.2x trailing earnings.

Moreover, unlike its peers on this list, UBA and Access Bank, Diamond Bank actually appears to have laid the groundwork for exceptional performance in 2013. The bank increased its lending to customers by 38% over the past 12 months and deposits have surged 29%.

2. Cadbury Nigeria +159.5% (Nigeria)

Bouncing back strongly from a 2006 accounting scandal, the confectioner posted sweet returns in 2012 on the back of 34% earnings growth through the first three quarters. But the company actually registered a decrease in revenue and operating profit during the same time period, so these earnings gains may prove ephemeral. Management is banking on new marketing efforts of its Bournvita line and increased promotion of parent company Kraft’s products to boost the top line in 2013.

1. International Breweries +172.5% (Nigeria)

Frontier Africa’s best stock this year is a second-tier Nigerian brewer. Standing in the shadow of the much larger Guinness Nigeria and Nigerian Breweries, International quietly expanded its brewing capacity and sold lots more beer. How much more? Over the first nine months of 2012 sales soared 39% and earnings more than doubled. Nigerian investors took note and now anticipate an inaugural dividend payout.

The company now sports a PE ratio of nearly 50 and administration expenses are remarkably high, but this is definitely an under the radar stock worth watching in 2013.

What Do You Think?

There you have it, 2012’s best African stocks. Did this list surprise you? In the weeks ahead, we’ll be asking some market experts which stocks they think will be among 2013’s top performers. Do you have any predictions? Let us know in the comments!

Related Articles

The 10 Best-Performing African Stocks of 2011

Africa’s Top 10 Stocks Through the First Half of 2012

[Disclosure: I own shares of Ghana Oil.]

16 thoughts on “The 10 Best African Stocks of 2012”

  1. I very much enjoy your newsletter and find it very insightful. I am an American who makes frequent trips to Rwanda and I share your enthusiasm for investment opportunities in Africa. Rather than make an investment in a mutual fund, I would like to make a direct investment in some of the stocks you recommend.

    Can you suggest a way that I might best be able to do this? Are there tax complications for an American making direct investments in African companies?

    Thank you for your help.


    1. Thanks, Daniel. I envy your Rwanda connection. It’s quite a happening corner of the continent these days.

      As an American citizen you can actually invest directly in the Rwandan Stock Exchange (or any other African stock exchange for that matter). Here’s an article that gives some tips on how to do so:

      How to Invest on the Rwanda Stock Exchange

      And here’s a brief article on the tax implications of overseas investments:

      3 Tax Tips for Africa Investors

      Don’t hesitate to post in the comments of either of these articles if they don’t address something you had questions about.

      All the best to you,

    2. Daniel,

      I recently came back from Kenya for the holidays and instantly recognized the investment potential in East Africa. I literally was talking to my girlfriend (who’s Kenyan) about investing in Uchumi when this article shows up in my inbox saying it’s the 4th hottest stock of 2012.

      To your question, if this helps, I recently sent off my paperwork (application, CDS1 form, passport photos, copy of passport, utility statement for proof of physical address and a check stub for proof of income) to Dyer and Blair, an investment bank in Kenya since before Kenya was independent. They are a brokerage firm to handle my investments on the Nairobi Stock Exchange. You get the account opening and CDS1 form from their website at

      The only thing they’re waiting on from me is to open a local (Kenyan) bank account. This is only needed if you want your dividends deposited there instead of wiring (which is more expensive and could negate any earnings) the money to your bank in America or mailing it which is also expensive relative to making a deposit. Dividends cannot be automatically reinvested so there has to be a place to put your earnings.

      I’ve sent the paperwork, similar to what is listed above, to KCB. KCB has a link to open an account online with all the forms. Their website is

      Though I opened accounts with these companies, I do recommend you look into others. Brokerages can be found at Banks can be found at

      Hope this helps. I am looking forward to investing in Kenya. Let me know how Rwanda goes. I might be interested!

  2. You say you own shares of Ghana Oil. Who is your broker? Can you recommend any brokers? Can you recommend any trading platforms? Are platforms usually offered through the broker?

    1. Hi, Lydia. Great to see you here!

      The Ghana Stock Exchange remains a relatively illiquid market, so I don’t see many trading opportunities there. But it does offer some interesting opportunities for long-term investors. You may find the following article useful:

      How to Invest on the Ghana Stock Exchange

      I’ve used a number of different Ghanaian brokers and have been impressed by the service offered by the firms listed in the article.

      1. Thanks Ryan! I’ve already shared this article on my FB page. And it got some great feedback too. Thanks for sharing this great info! It’s hard to find accurate, timely information you can trust so I appreciated this article.

  3. You ignored the Zimbabwe stock market. It has some good companies like Astra, BAT-Zimbabwe, Falgold, and many others which had great returns in 2012. Returns were northwards of 120% for some of these companies.

    1. Thanks, Chris. The Zimbabwe Stock Exchange did have a great year, and some companies put up fantastic returns. Unfortunately, Zimbabwe’s top performers are also relatively illiquid, which makes them difficult to buy and sell. The stocks on the above top 10 list averaged trading volumes in excess of $10,000 per day over the most recent 30 days.

  4. Happy new year, Ryan. I would also like to add two Kenyan companies that come close to your well researched list. They are Crown Paints Kenya (benefiting from the construction boom) and Pan Africa Insurance, which was also buoyed by growth.

    1. Many thanks, Charles. These two stocks had fantastic years. Crown Paints posted a 107% local currency return and Pan Africa Insurance surged 94%. But they didn’t meet the $10,000 daily liquidity threshold to be added to this list.

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