Most stock tips tell you what to do and never why. A friend says a bank stock is about to fly, a WhatsApp broadcast names three tickers, and you are left to decide with no way of checking the reasoning. M20 Robo is built to do the opposite: give a plain buy, hold or sell call on Nigerian Exchange (NGX) stocks, and show you the working behind it.

Three ways to ask what a company is worth

No single valuation method is reliable on its own, particularly in a market where interest rates, inflation and the naira can move sharply within a year. So the engine values every stock three ways, and trusts the answer most where they broadly agree.

Intrinsic value

What the business is worth based on the cash it can generate for shareholders over time, discounted back to today at a rate that reflects Nigerian risk. For steady dividend payers, such as many banks and consumer goods companies, dividend-based models do much of this work.

Relative value

How the stock is priced against comparable companies, using measures such as price-to-earnings and price-to-book. A bank trading at half the price-to-book of its peers is not automatically cheap, but the gap needs explaining.

Asset-based value

What the company's net assets are worth. This matters most for holding companies, insurers and firms with large property or investment portfolios, where earnings can understate what shareholders actually own.

From three numbers to one range

The engine weights the three methods by how well each suits the company in question, then produces a fair-value range rather than a single target price. A range is more honest. It tells you the engine's best estimate and how confident it is.

  • Buy when the share price sits clearly below the range, with enough margin to absorb being wrong.
  • Hold when the price sits inside the range.
  • Sell when the price runs clearly above it.

Checks before any call goes out

Valuation says whether a stock is cheap. It does not say whether you can trade it sensibly. Before a call is published, the engine also looks at:

  • Liquidity. Many NGX stocks trade thinly. A stock that looks cheap but rarely changes hands can be hard to buy or sell at the quoted price.
  • Price trend. Technical signals help with timing, so the engine flags it rather than recommending a stock in the middle of a sharp fall without comment.
  • Data quality. Where a company's latest results are late or restated, confidence is marked down.

Where people come in

The model does the heavy lifting across the whole market, but our investment team reviews the assumptions that drive it, such as discount rates and sector weightings, and can override a call when the numbers miss something they cannot see.

What a call is, and what it is not

A buy, hold or sell call is an opinion about value, not a promise about price. Shares can stay cheap for longer than expected, and good companies can disappoint. The calls are designed to sit inside a diversified portfolio matched to your risk profile, not to replace one.

This article is for general information only and is not investment advice. Investments can go down as well as up. Speak to a qualified adviser about your own circumstances.