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 two stocks I’ve chosen at random from a list of those that popped up: Singapore Press Holdings Limited (SGX: T39) and Overseas Education Ltd (SGX: RQ1).
Source: S&P Global Market Intelligence
Singapore Press Holdings, or SPH for short, is a publisher of most of Singapore’s major newspapers such as The Straits Times, The Business Times, Berita Harian, Lianhe Zaobao, and more.
The company also publishes numerous magazines, develops real estate, and has interests in other businesses such as online advertising portals and events management. As part of its real estate business, SPH is the majority owner and manager of SPH REIT (SGX: SK6U), a real estate investment trust that currently owns two retail malls in Singapore.
SPH reported its fiscal first quarter results (for the three months ended 31 November 2016) in the middle of January. Quarterly revenue and net profit were down by 6% and 12.4% year-on-year, respectively (the latter excludes one-off charges).
During the quarter, SPH also suffered a sharp 15.0% decline in newspaper ad revenue. It’s worth noting that SPH’s newspaper ad revenue has fallen consecutively for a number of years from FY2012 (fiscal year ended 31 August 2012) to FY2016.
In SPH’s earnings release, the company commented that “business conditions are expected to remain challenging in view of the economic headwinds and structural challenges confronting the media industry.”
Overseas Education is the next company I have on the list. It is a private foreign system school operator in Singapore and it provides the International Primary Curriculum (IPC), International Baccalaureate (IB) curriculum, and more.
The company’s students are mainly children of expatriates living in Singapore. Right now, Overseas Education has around 3,000 students from over 70 nationalities.
Overseas Education’s latest results were for the nine months ended 30 September 2016. In that period, the company experienced a 4.4% year-on-year decline in total revenue to S$69.9 million, which eventually resulted in a sharp 70.3% fall in net profit to S$3.75 million.
The company commented in its earnings release that the “current economic outlook continues to be challenging.” But, it’s confident of its market position given the completion of its new school campus at Pasir Ris in 2015 and the launch of new school programmes.
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 SPH and Overseas Education 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.