I’m a value investor. So, I like to search for companies that are trading at good value. A list of stocks that are near a 52-week low is a good place to start my search for a good reason. These are the stocks that are either neglected or beaten down by investors. And, some of these stocks can be bargains in relation to their actual economic worth because market participants can at times react too negatively to certain companies that have sound long-term prospects but have experienced some short-term stumbles. As such, I will screen for stocks that are trading…
I’m a value investor. So, I like to search for companies that are trading at good value. A list of stocks that are near a 52-week low is a good place to start my search for a good reason.
These are the stocks that are either neglected or beaten down by investors. And, some of these stocks can be bargains in relation to their actual economic worth because market participants can at times react too negatively to certain companies that have sound long-term prospects but have experienced some short-term stumbles.
As such, I will screen for stocks that are trading near a 52-week low nearly once every week. There are many stocks that pop up on my screen each time I run it. In here, let’s look at three stocks I’ve chosen at random from a list of those that popped up. They are: Gallant Venture Ltd (SGX: 5IG), Riverstone Holdings Limited (SGX: AP4), and Rowsley Limited (SGX: A50).
Source: S&P Global Market Intelligence
Gallant Venture is a Singapore-based company that sources the majority of its revenue from Indonesia.
Its business activities include utilities (the supply of power, water, telecommunications and waste management services), automobile retail, and the development and management of industrial parks and resorts. Most of the aforementioned business activities take place in Indonesia’s Batam and Bintan.
The company also has a large shareholder that is pretty well-known in Singapore: Sembcorp Industries Limited (SGX: U96). As of 16 March 2016, Sembcorp Industries owns 11.96% of Gallant Ventures.
In the quarter ended 30 September 2016, Gallant Venture saw its revenue decline by 13% year-on-year to S$389.8 million. The company’s loss also widened from S$26.1 million in the third quarter of 2015 to S$28.3 million in the reporting quarter.
Next up we have Riverstone, a manufacturer of rubber gloves that are used in the cleanroom and medical sectors.
The company’s latest earnings, for the quarter ended 30 September 2016, was released in November. Revenue climbed by 11% to RM167 million, although profit dipped by 15.6% to RM29.8 million.
In its earnings release, Riverstone commented that it is expected to end 2016 with a production capacity of 6.2 billion gloves, up 1 billion from end-2015. The company also said that it has started construction of a new factory that could add a further 1 billion gloves to its production capacity by the end of this year.
Some of the factors Riverstone thinks could be a challenge to its business in 2017 are the “movement in commodity prices, the US currency fluctuation and competition from the other glove manufacturers.”
In early 2016, The Straits Times had a very interesting profile of Riverstone’s founder and current leader, Wong Teek Son. You can find it here.
The last company on my list today is Rowsley. It is involved with real estate development, investment, and consultancy. Rowsley also has an architectural arm.
In the third quarter of 2016, Rowsley reported a big 40% jump in revenue to S$24.6 million. A profit of S$5.4 million in the reporting quarter also represented a significant improvement from the loss of S$4.2 million recorded in the same quarter a year ago. It should be noted that the positive profit was driven by a one-off gain of S$7.2 million that came from the remeasurement of the value of Rowsley’s stake in another company.
During the reporting quarter, Rowsley acquired a hospitality management company named Ariva Pte. Ltd. Rowsley thinks that the acquisition “will contribute positively” once it is completed.
A Foolish conclusion
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 Gallant Venture, Riverstone, and Rowsley 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.
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 Riverstone Holdings. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.