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These 3 Stocks Are Trading Near Their 52-Week Lows

Photo credit: Rafael Matsunaga. Licence: http://creativecommons.org/licenses/by/2.0/

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 their respective 52-week lows 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 52-week lows 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 such stocks: IHH Healthcare Bhd (SGX: Q0F)(KLSE: 5225.KL), Keong Hong Holdings Ltd (SGX: 5TT), and Q&M Dental Group (Singapore) Limited (SGX: QC7).

IHH Healthcare, Keong Hong, Q&M Dental 52 week low table
Source: SGX Stock Facts; Yahoo Finance

IHH Healthcare is an international provider of healthcare services in markets where it thinks the demand for quality healthcare is growing rapidly. Right now, the company is active in Asia (this includes Singapore and Malaysia), Central & Eastern Europe, the Middle East, and North Africa.

Asia remains the company’s largest market. Some of the company’s brands include Gleneagles, Mount Elizabeth, Pantai, ParkwayHealth and Acibadem.

The company recently announced its 2016 full year results. During the year, IHH Healthcare achieved a 19% jump in revenue and 7% increase in EBIDTA (earnings before interest, taxes, depreciation, and amortisation). But, the company’s PATMI (profit after tax and minority interest), which is what accrues to shareholders, is actually down by 34%. If exceptional items were adjusted for, 2016’s PATMI would still be 4% lower than in 2015.

In its earnings release, IHH Healthcare commented that it “remains confident of the sustained demand for quality private healthcare services in its home and growth markets, especially in India and Grater China.” The company’s focus for 2017 would be to “continue to develop and enhance its service offerings in existing hospitals and ramp up hospitals opened in 2015 to achieve optimal operating leverage, while integrating its newly acquired assets.”

Next up we have Keong Hong, a provider of building construction services to the public and private sectors. The company can work on a range of projects spanning residential, commercial, industrial, and institutional.

Keong Hong recently released results for its fiscal first quarter, the quarter ended 31 December 2016. In that period, the company saw its revenue and profit attributable to shareholders fall by 37% and 21%, respectively, compared to the same quarter a year ago.

In its earnings release, the construction company commented that “sentiments among building contractors continued to dip and more contractors expect business conditions to be less favourable in 1H2017 as compared to 2H2016.”

Although Keong Hong’s current stock price is near a 52-week low, it has been a big winner over the past five years with a 114% gain. Given that it currently has a trailing price-to-earnings (PE) ratio of just 3, Keong Hong may be a good candidate for further research for investors who fancy statistically cheap stocks.

Q&M Dental rounds up our trio. The company primarily operates a network of private dental outlets in Singapore, Malaysia, and China.  

The company currently has three business segments, namely, Primary Healthcare, Dental Equipment & Supplies Distribution, and Dental Supplies Manufacturing.

In its latest 2016 full year earnings, which was released earlier this month, Q&M Dental saw revenue growth in excess of 20% for all three segments. The standout performer was the Dental Equipment & Supplies Distribution segment, which experienced a 43% jump in revenue. Q&M Dental managed to translate the top-line growth into the bottom-line – its profit attributable to shareholders of S$28.3 million in 2016 is up 148% over 2015.

That said, Q&M Dental’s bottom-line in 2016 had benefitted greatly from the one-time gain of S$21.3 million that was due to the spin-off of a subsidiary that occurred during the year.

Looking ahead, the company has a number of plans in place to grow its business, some of which are: (1) Expansion of dental clinic network in Singapore and the acquisition of specialist dental clinics; (2) extend the footprint of its private dental facilities in Malaysia; and (3) Continue growing in China organically and via joint-ventures and acquisitions.

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 IHH Healthcare, Keong Hong, and Q&M Dental 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.