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The Nigerian equity market closed February on a softer note, with the All-Share Index settling at 192,826.8 points, slipping below the 193,000 mark.

Despite the marginal pullback, the benchmark index remains 23.91% year-to-date, pushing total market capitalization to N123.77 trillion.

Beneath the headline index performance, however, the strongest gains have been concentrated in small- and select mid-cap stocks.

The ten best-performing stocks so far this year are largely companies with a combined market capitalization of about N7.6 trillion; a relatively modest portion of the broader market, highlighting the need for careful examination of whether the rallies are supported by fundamentals, trading liquidity and valuation.

One of the standout performers is SCOA Nigeria Plc, whose shares have surged 437% year-to-date, rising from N7.10 at the start of 2026 to N38.15 at the end of February.

The move ranks it second among the best-performing stocks on the Exchange, behind Zichis Agro-Allied Industries Plc, which recently faced trading suspension following extraordinary price movements.

In February alone, it advanced 22%. The surge builds on a 245% gain in 2025, when the stock started that year at N2.06.

To put that into perspective, an investor who committed N1 million at N2.06 in January 2025 would have acquired roughly 485,437 shares.

At N38.15 per share by the end of February 2026, that holding would now be worth about N18.52 million; a capital gain of about N17.52 million, excluding transaction costs.

In simple terms, N1 million would have multiplied more than 18 times in just over a year. Few assets deliver that kind of return in such a short timeframe.

But do the trading activity and fundamentals support the scale of the move?  What is the valuation saying about the stock?

SCOA’s free float stands at 133.44 million shares, representing 20.54% of total issued shares.

Taken together, the trading data suggests the price rose much faster than trading activity.

Fundamentally, there is a recent turnaround. Revenue rose 41% year-on-year in 2025 to N8.36 billion from N5.93 billion in 2024, but lower than the 2023 N10.384 billion

In short, the fundamentals support a recovery story, but they do not fully justify the scale of the re-rating now reflected in the share price.

The valuation tells a more demanding story. At N38.15, SCOA trades at nearly 80 times trailing earnings and about 3 times sales.

For the valuation to normalize to a 15–20x multiple, 2026 profit would need to rise to between N1.2 billion and N1.6 billion, implying earnings growth of 160 to 245% from 2025 levels.

The balance sheet also warrants attention. Current assets rose sharply in 2025, driven by a significant build-up in receivables and inventory.

Taken together, SCOA still presents an investment case based on its earnings turnaround. However, at current valuation levels, the stock has transitioned from a recovery to a forward-growth bet.

Investors should approach with discipline, ensuring that future earnings growth, cash conversion and balance sheet stability justify the premium multiple now embedded in the price.