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 many companies that pop up each time I run the screen. In this week’s exercise, two companies I’ve picked at random from a list of companies that appeared on my screen are StarHub Ltd (SGX: CC3) and CEFC International Ltd (SGX: Y35).

Source: S&P Global Market Intelligence

StarHub is a company many Singaporeans are likely to be familiar with given that it is Singapore’s second largest telecommunications company, coming in behind Singapore Telecommunications Limited (SGX: Z74) and in front of M1 Ltd (SGX: B2F).

In the company’s latest reporting quarter (the second-quarter of 2016), revenue came in unchanged from a year ago. But, StarHub managed to grow its earnings per share by 9%. In the earnings release, the company lowered its outlook for 2016. In the previous quarter, StarHub said that service revenue would grow in the low single digit range; the revised outlook called for 2016’s revenue to be roughly the same as 2015’s.

CEFC International is a very different business. It trades petrochemical, fuel oil, and petroleum products.

2015 was a significant turnaround year for CEFC. The company saw its revenue jump by 45% to US$474.5 million. Its profit, meanwhile, had soared from just US$0.72 million in 2014 to US$17.9 million.

The first-half of 2016 is so far a mixed-bag. While revenue jumped nearly 20-fold from US$26.2 million to US$519 million, the bottom-line did not improve much. The first-half of 2015 saw CEFC clock a loss of US$1.66 million; this improved to a loss of US$1.09 million in the first-half of 2016. CEFC’s cash flow picture was even worse – a negative operating cash flow of US$1.1 million in the first-half of 2015 had become a negative US$23.5 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 StarHub and CEFC 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.