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: Singapore Post Limited (SGX: S08), ComfortDelGro Corporation Ltd (SGX: C52), and Great Eastern Holding Limited (SGX: G07).
Source: SGX Stock Facts; Yahoo Finance
Singapore Post is primarily in the business of providing mail and logistics services. Its business is currently organized into three major segments: Postal, Logistics, and eCommerce.
The company announced its latest quarterly results, for the quarter ended 31 December 2016, two weeks ago. Similar to prior quarters, Singapore Post continued to grow its revenue, this time by 16.8% compared to the same quarter a year ago. But – in a similar manner to the past few quarters – the company’s profit has continued to fall. In the reporting quarter, Singapore Post’s bottom-line declined by 28% as a result of pricing and cost pressures.
In the earnings release, Singapore Post also revealed that it is facing a “risk of significant impairment” of the value of Trade Global, an end-to-end eCommerce services provider. The US-based Trade Global, which was acquired by Singapore Post for US$169 million on October 2015, has so far not delivered a satisfactory business performance.
As Singapore Post increasingly shifts its business-focus toward logistics and eCommerce activities and away from traditional mail services, investors may see more volatility in its financial performance.
As a quick introduction, ComfortDelGro is a land-transport company with operations mainly in Singapore, Australia, the United Kingdom, and China. It is also the majority owner of vehicle and non-vehicle testing and inspection outfit Vicom Limited (SGX: V01), and bus and rail services operator SBS Transit Ltd (SGX: S61).
ComfortDelGro’s share price has been falling of late, declining by over 20% since the middle of 2015. There are many possible contributors to the decline, such as the depreciation of the pound sterling, competition from ride-hailing apps such as Grab and Uber, higher oil prices, and a weaker financial performance.
On the last point, ComfortDelGro’s revenue had suffered year-on-year declines of 1.4% and 3.1% in the second and third quarters of 2016, respectively. The company’s latest results – for the year ended 31 December 2016 – was released two weeks ago. Revenue for the year had slipped by 1.3% while profit attributable to shareholders had increased by 5.0%.
Regarding the company’s future, ComfortDelGro commented in its earnings release that it expects revenue growth in its Public Transport Service Business segment in Singapore. But, every other business segment is expected to deliver lower revenue.
The last stock here is Great Eastern, a major life insurance company and a majority-owned subsidiary of Oversea-Chinese Banking Corp Limited (SGX: O39). Being founded nearly a century ago in 1908, Great Eastern is also the oldest life insurance group in Singapore and Malaysia.
The insurer’s latest earnings was announced just last week. In 2016, Great Eastern delivered a mixed performance. Full-year revenue was up 9%, but profit attributable to shareholders declined by 25%. Despite the profit set-back in 2016, Great Eastern’s management expressed confidence about the company’s growth prospects in the earnings release. Management also said the “fundamentals underpinning [its] business remain strong.”
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 Singapore Post, ComfortDelGro, and Great Eastern 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.