Some great investors – such as John Neff and Walter Schloss – like to buy stocks with beaten-down prices. That’s because they believe that some stocks that have fallen hard may be a bargain relative to their actual economic worth.
I periodically run a filter to sieve for companies with stock prices that are near 52-week lows. On a side note, the use of stock filters can help investors narrow the playing field instead of going through the list of over 700 companies in Singapore’s stock market one by one.
So, what does my 52-week low filter show this week? Here are a few companies chosen at random from the list: Keppel Corporation Limited (SGX: BN4), Sembcorp Marine Ltd (SGX: S51), Singapore Post Limited (SGX: S08), and Aspial Corporation (SGX: A30).
Source: S&P Global Market Intelligence
Keppel Corp and Sembcorp Marine are two well-known companies in the local market as both have sizeable market values; at their current share prices, they have market caps of S$9.7 billion and S$2.8 billion, respectively. That’s not the only similarity – they are some of the world’s largest builders of oil rigs and have heavy exposure to the oil & gas industry.
Given the sharp decline in the price of oil over the past two years, Keppel Corp and Sembcorp Marine both commented in their latest earnings releases that their businesses are facing strong headwinds at the moment.
Singapore Post is another well-known company given the fact that it runs Singapore’s postal services. But there’s actually more to Singapore Post – it also has a retail mall (currently under renovation) and provides logistics services that support the eCommerce industry.
The company has enjoyed strong revenue growth (the top-line has more than doubled over the last five fiscal years), but corporate governance issues that surfaced last year has weighed down on Singapore Post’s stock price.
Lastly, we have Aspial. The company has a wide spectrum of businesses, including jewellery retail, property development, and financial services.
Some of the company’s jewellery retail brands include Aspial and Lee Hwa Jewellery. There are more. All told, Aspial has over 70 jewellery boutiques in Singapore and Southeast Asia. The company’s property development business is focused on Singapore, Malaysia, and Australia. And on financial services, Aspial provides pawnbroking services under its listed subsidiary, Maxi-Cash Financial Services Corp Ltd (SGX: 5UF).
The next table shows how the quartet’s profits have changed over the last 12 months and how their leverage looks like (leverage is measured with the net debt to shareholder’s equity ratio and it is a proxy for how much financial risk a company is taking on).
Source: S&P Global Market Intelligence
It’s worth noting that not every company with a stock price near a 52-week low is a legitimate bargain. A declining stock price can decline yet further if the underlying business performance continues to weaken.
Nothing we’ve seen here about Keppel Corp, Sembcorp Marine, Singapore Post, and Aspial should be taken as the final word on their investing merits. The information presented in this piece should be viewed only as a useful starting point for further research.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.