Here Are 3 Stocks Trading Near Their 52-Week Lows

Photo credit: Rafael Matsunaga. Licence:

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. Market participants can at times react too negatively to certain companies that have sound long-term prospects but have experienced some short-term stumbles.

Nearly once every week, I run a screen to look for companies with stock prices that are near 52-week lows.

There are many companies that pop up on my screen each time I run them. This week, let’s look at two companies I’ve chosen at random from a list of those that appeared. They are M1 Ltd (SGX: B2F), Hour Glass Ltd (SGX: AGS), and Singapore Exchange Limited (SGX: S68).

Source: SGX StockFacts; Google Finance

M1 is the smallest player within Singapore’s telecommunications industry, sitting in third-place behind Starhub Ltd (SGX: CC3) and Singapore Telecommunications Limited (SGX: Z74).

In the third-quarter of 2016, M1 had reported year-on-year declines in quarterly revenue, net profit, and earnings per share of 10.3%, 23.4%, and 22.8%, respectively.

A big culprit for the poor performance is a reduction in the average revenue per user (ARPU) for the company’s mobile service business segment. Even growth in subscriber counts and market share couldn’t make up for the decline in ARPU.

Investors may also want to note that Singapore’s telco industry would see the entrance of a fourth player soon. Two months ago, three companies submitted bids to become the fourth telco in Singapore.

The next company on the list is luxury watch retailer Hour Glass. The company has a network of over 40 boutiques in nine cities in the Asia Pacific region. Some of the countries that Hour Glass has a presence in include Singapore, Thailand, and Hong Kong.

Some of the watch brands that the company retails include Audemars Piguet, Hublot, Jaeger-LeCoultre, Panerai, Rolex, and Patek Philippe.

In the quarter ended 30 June 2016, Hour Glass saw its revenue fall by 7% year-on-year. This resulted in a 22% decline in profit attributable to shareholders. The company’s performance had been affected by the regional slowdown, which dampened consumer sentiment and demand for luxury watches.

Lastly, we have Singapore Exchange, the only securities exchange in Singapore.

The company’s latest results was released on 19 October 2016 and it was for the quarter ended 30 September 2016. Singapore Exchange reported that its revenue, net profit, and EPS were down by 13%, 16%, and 16% respectively, from a year earlier. This was mainly due to “lower levels of market activities, as compared with a much more volatile market a year earlier.”

Yesterday, the company announced that its proposed acquisition of UK-based shipping market information provider Baltic Exchange has received regulatory approval and would be completed today.

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 M1, Hour Glass, and Singapore Exchange 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.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and 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. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.