These 2 Blue Chips Are Near 52-Week Lows: Are They Bargains?

It’s not uncommon at all to hear of investors trawling through the list of shares hitting their 52-week lows to find potential bargains.

With this in mind, let’s take a look at two blue chips which are closest to their respective 52-week lows – namely, SIA Engineering Company Limited (SGX: S59), and Keppel Corporation Limited (SGX: BN4) – to see if they might be of interest to bargain hunters.

SIA Engineering and Keppel Corp price table

Source: S&P Capital IQ

SIA Engineering, which does maintenance, repair, and overhaul (MRO) work for aircrafts, has seen its share price fall sharply by 17% from S$4.76 at the start of November. The decline was likely driven by its poor second quarter results, released on 4 November 2014, where quarterly revenue and profit fell by 3% and 41%, respectively, compared to a year ago.

But interestingly, despite its fall since, the share’s still valued at a high valuation of some 20 times its trailing earnings; that’s a fair bit higher than its long-term average price/earnings ratio (going back to the start of 2004) of 16. For some other perspective, the SPDR STI ETF (SGX: ES3) is valued at a PE of around 13.4 currently; the SPDR STI ETF tracks the fundamentals of Singapore’s market barometer, the Straits Times Index (SGX: ^STI).

SIA Engineering PE ratio

Source: S&P Capital IQ

Moving to Keppel Corp, the company’s really been hammered with the recent fall in the price of oil (as an example, brent crude had fallen from US$115 a barrel in June this year to just a hair’s breadth lower than US$70 currently). Keppel Corp’s two largest profit drivers are its offshore & marine and property development segments, with the former being the main pillar over the past few years.

In contrast to SIA Engineering, Keppel Corp’s valuation looks a lot more tantalizing. As I wrote in an earlier article today (the chart below also comes from the same article), Keppel Corp’s “current PE of 8.1 is significantly lower than its long-term average PE (going back to the start of 2005) of 13.1.”

Keppel Corp PE ratio

Source: S& Capital IQ

Thus from a valuation perspective, SIA Engineering can’t really present a real bargain whereas Keppel Corporation can.

But that said, it pays to remember that looking at valuation ratios is merely a starting point and that a closer study of their business futures are warranted. For more of SIA Engineering’s growth opportunities and risks, you can check out here; for the same with Keppel Corporation, you can jump in here.

For more free investing analysis and important updates about the stock market, sign up to The Motley Fool Singapore's weekly investing newsletter, Take Stock Singapore. Written by David Kuo, it can help you grow your wealth in the years ahead.

Like us on Facebook to follow our latest hot articles.

The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing doesn't own shares in any company mentioned.