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Here Are 2 Stocks Trading Near 52 Week Lows

Some of the greatest investors around – John Neff and Walter Schloss are good examples – source their investing ideas from lists of stocks that have fallen hard. That’s because they believe some beaten-down stocks will be bargains in relation to their actual economic worth.

Nearly once every week, I run a screen to look for companies with stock prices that are near 52-week lows. (On a related side note, the use of stock screens can also help investors narrow the playing field instead of investigating the 700-plus listed companies in Singapore one at a time.)

There are always a bunch of companies that pop up. This week, two companies I’ve picked at random from the list are BreadTalk Group Limited (SGX: 5DA) and Vicom Limited (SGX: V01).

breadtalk-and-vicom-52-week-low-table
Source: S&P Global Market Intelligence

BreadTalk is a food & beverage retailer with nine different brands under its banner. These brands include the BreadTalk bakeries, Food Republic food courts, Toast Box cafés, RamenPlay Japanese ramen restaurants, Din Tai Fung Chinese-cuisine restaurants, and more.

The company is likely to be familiar to Singaporeans given that it had 124 outlets scattered around the Garden City at the end of 2015. All told, BreadTalk has 934 stores right now and has a presence in 17 locales across Asia and the Middle East.

In its last reported quarter (the second-quarter of 2016), BreadTalk experienced a 3.3% year-on-year decline in revenue. The bottom-line picture was worse, however, as the company’s net profit fell by 55%.

The second company on the list, Vicom, is also a company that some Singaporeans may be familiar with. Vicom, which is majority-owned by land transport giant ComfortDelGro Corporation Ltd (SGX: C52), is a provider of vehicle and non-vehicle-related technical testing and inspection services. There are nine vehicle inspection centres in Singapore and seven of them are controlled by Vicom.

The company has been a solid long-term winner in the local market with its share price having climbed by 70% and 411%, respectively, over the last five and 10 years. For perspective, the gains from the Straits Times Index (SGX: ^STI), Singapore’s market barometer, over the same period have been just 2% and 12%.

Vicom’s share price growth has been accompanied by solid business growth. From 2005 to 2015, the company’s profit has more than doubled from S$8.66 million to S$31.4 million. Likewise, its free cash flow has jumped by a similar magnitude, rising from S$10.7 million to S$32.6 million.

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 BreadTalk and Vicom 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.