Big cap Dangote Cement outperforming NSE 

The Nigerian Stock Exchange (NSE) is down 1.34 percent year to date, however heavyweight bellwether Dangote Cement is bucking the downward trend with a 9.49 percent gain ytd.

Dangote Cement has a market capitalisation of $24.5 billion and is the largest listed company in Nigeria.

Investors seem to love this stock because even though it is a heavy weight large cap, it is still throwing out eye-popping revenue and net income growth figures.

The cement name which is the largest manufacturer of the building material in sub-Sahara Africa (20.23 million metric tons) grew revenues by 29 percent in the nine month period to September 2013.

After tax income for the nine month period advanced by 46 percent to N154.9 billion ($974 million), from N105.5 billion a year earlier.

Dangote Cement is riding the demographic growth wave in Nigeria of rising population, increasing urbanisation and higher income levels.

The 170 million population may also more than double to 400 million by 2050.

Dangote Cement fires its plants with natural gas which is cheap and plentiful in Nigeria. Its gross margins - around 50 percent- are some of the highest in the world.

The company is also spending $4 billion to expand into 18 countries in Africa

I believe Dangote Cement can easily double to a $50 billion company, if it can effectively execute its expansion plans.

The stock closed trading at N239.77 a share, today.

Investors could accummulate this stock here with a stop loss at N180 per share, while my initial upside target would be N320 per share in the next 10 months.

Chart: Bloomberg