Stock Recommendations: Investment Opportunities
The stock market has remained a lucrative space for the first quarter of 2026, supported by strong full‑year 2025 results released in March and April. This positive performance has translated into meaningful gains for investors, who have benefited from both capital gains and dividend payouts during the same period, as most banks have improved their dividend payouts year on year.
However, the market has experienced heightened volatility alongside a surge in oil prices driven by geopolitical tensions in the Middle East. These developments have prompted foreign investors to scale back their exposure, dampening upward momentum across several counters. As a result, share prices have softened, creating attractive entry points. In this opportunity‑ rich environment, we see the following stocks as compelling investment opportunities.
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KCB Group: LONG-TERM BUY
At KES 67.50 per share, the Bank posted gains of 0.4%, 6.7%, and 2.7% over the past 3, 6, and 12 months, respectively. Average prices were KES 71.99 (3 months), KES 68.06 (6 months), and KES 58.60 (12 months), within a 12‑month range of KES 38.45–80.25. Recent gains reflect optimism around FY2025 performance and the final dividend book closure.
In FY2025, the largest bank by asset reported a profit before tax (PBT) of KES 90.90Bn, representing a 10.9% increase from KES 81.97Bn recorded in FY2024. This growth was supported by an expanding loan book and lower funding costs, which helped push operating income up by 4.3% to KES 213.78Bn. Profit after tax (PAT) rose by 10.6% to KES 68.35Bn, up from KES 61.77Bn in the prior year.
As a result, earnings per share (EPS) increased by 11.2% from KES 18.70 in FY2024 to KES 20.80 in FY2025. The improved earnings enhanced shareholder returns, with the dividend payout raising to KES 7.00 per share in FY2025, a 133.3% increase from the KES 3.00 paid in FY2024.
Given the Bank’s solid financial performance and positive outlook, we recommend a LONG‑TERM BUY, with an intrinsic value of KES 93.25 per share, a 38.1% from the current market price of KES 67.50 as of 5th May 2026.
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HF Group: LONG-TERM BUY
Currently, HF Group is trading at KES 8.84 per share from a 12‑month high of KES 11.25 and a low of KES 5.40. Over the past year, the counter has shown relative price stability, with average prices of KES 9.24, KES 10.03, KES 10.08, and KES 9.28 over the last 1, 3, 6, and 12 months, respectively. On a year‑to‑date basis, the share has maintained an average price of KES 10.03, underscoring a stable trading performance.
The Group delivered a strikingly improved financial performance in FY2025, with profit before tax rising sharply by 239.8% to KES 1.48Bn, up from KES 436.75Mn reported in FY2024. This significant growth reflects the successful transformation of the business from a mortgage-focused lender into a fully-fledged commercial bank, following the 2024 rights issue.
Looking ahead, the share price is projected to exceed KES 14.00 over the next 12 months, supported by firming fundamentals and management’s expectation of a resumption of dividend payments in March 2027.
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KenGen: LONG-TERM BUY
At a current trading price of KES 9.26 per share, the counter has recorded average prices of KES 9.39, KES 9.48, and KES 8.46 over the past 3, 6, and 12 months, respectively.
During HY2026, KenGen reported a modest 4.5% decline in profit before tax (PBT) to KES 7.59Bn, down from KES 7.95Bn in the corresponding period, as higher operating costs offset a 9.4% increase in total revenue.
Looking ahead, full‑year earnings are expected to improve, supported by sustained growth in electricity demand and the planned addition of 63MW to the company’s generation capacity. This expansion is anticipated to enhance operational output and reinforce returns on investment over the medium to long term.
Consequently, we maintain a LONG‑TERM BUY recommendation with a target price of KES 11.0, anchored on the company’s stable and gradually increasing dividend profile, supported by consistent revenue growth and rising national power demand.
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Safaricom: LONG-TERM BUY
The Telco’s share is currently trading at KES 29.90, with a 12‑month high of KES 33.95 and a low of KES 18.30. Price movements have remained relatively stable, with average prices of KES 29.50, KES 30.48, KES 29.74, and KES 27.79 recorded over the past 1, 3, 6, and 12 months, respectively.
In HY2026, Safaricom posted a strong 63.1% increase in profit before tax (PBT) to KES 55.24Bn, driven by robust revenue growth and a significant reduction in losses from its Ethiopian subsidiary. This positive trajectory is expected to continue, with FY2026 results scheduled for release on 7th May 2026 and likely to reflect further earnings improvement.
In addition, the final dividend is anticipated to exceed the KES 0.85 interim dividend paid on 31st March 2026, signaling sustained profitability. Supported by stronger full‑year performance and an improving outlook for Safaricom Ethiopia, which is projected to breakeven by March 2027, the share price is expected to outperform the KES 36.00 valuation in a year.
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Equity Group: LONG-TERM BUY
As of 5th May 2026, the lender’s shares are trading at KES 74.50, having delivered gains of 9.6%, 6.8%, and 11.2% over the past 3, 6, and 12 months, respectively. Over the same periods, the counter recorded average trading prices of KES 73.52, KES 69.67, and KES 60.85 per share. Within the last year, the stock has traded between a high of KES 79.00 and a low of KES 42.50. The Group posted stellar FY2025 results, with profit before tax (PBT) rising by 51.6% to KES 92.11Bn from KES 60.74Bn in FY2024.
This performance was underpinned by robust growth in interest income and lower funding costs following interest rate cuts. Profit after tax (PAT) surged by 54.7% year‑on‑year from KES 48.82Bn to KES 75.54Bn, aided by a lower effective tax rate.
Based on improved performance and a return to near pre‑COVID earnings, we maintain a BUY recommendation, with a valuation of KES 111.63 per share, implying a 49.8% upside from the current price of KES 74.50.
