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…
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: Singapore Airlines Ltd (SGX: C6L), Singapore Post Limited (SGX: S08), and Singapore Press Holdings Limited (SGX: T39).
Source: SGX Stock Facts; Yahoo Finance
Singapore Airlines is most well-known for running its namesake full-service carrier, which is also the national airline of Singapore. Beyond Singapore Airlines, the company also has other airline brands under its banner such as Silk Air and the low-cost carrier, Scoot.
The company has a listed subsidiary in SIA Engineering Company Ltd (SGX: S59) as well. SIA Engineering specialises in providing aircraft maintenance, repair, and overhaul (MRO) services. It has over 80 international airlines as customers.
In early February, Singapore Airlines announced its third quarter results for its fiscal year ending 31 March 2017 (the reporting quarter was the three months ended 31 December 2016). During the quarter, Singapore Airlines’ revenue slipped by 2.5% year-on-year but operating profit managed to increase by 1.7%.
Regarding its future, Singapore Airlines commented in its earnings release that “2017 is expected to be another challenging year amid tepid global economic conditions and geopolitical concerns, alongside other market headwinds such as overcapacity and aggressive pricing by competitors.” The company added that “loads and yields for both the passenger and cargo businesses are projected to remain under pressure.”
Over the last 12 months, Singapore Airlines’ stock price has declined steadily and is down a total of 13%. The downward price movement has resulted in Singapore Airlines having one of the highest dividend yields among the Straits Times Index’s (SGX: ^STI) constituents at 4.5%.
The next company is Singapore Post, which provides postal and logistics services.
Singapore Post’s latest results, announced in early February, is for the third quarter of its fiscal year ending 31 March 2017. Revenue for the quarter rose 16.8% due to acquisitions in the company’s eCommerce business. But, net profit attributable to shareholders decreased by 27.9%, while underlying net profit (which strips away one-off items) was down 28.5%.
The bottom-line decline was due to operating losses in the company’s US-based eCommerce business, costs related to the new Regional eCommerce Logistics Hub, and a fall in domestic mail volumes.
In a similar manner to Singapore Airlines, Singapore Post’s stock price has also been on a general decline over the last 12 months. Since 23 March 2017, the postal and logistics services company has seen its stock price fall by 19%. The decline also gives Singapore Post a high trailing dividend yield of 5%.
But, investors should be mindful of the sustainability of the company’s dividend in light of its weakening profitability in the past few years.
Singapore Press Holdings is the last stock I have here. The company publishes many of Singapore’s major newspapers – such as The Straits Times and The Business Times – and counts real estate development and ownership as another important business segment. As part of Singapore Press Holdings’ real estate business, it is the majority owner and manager of SPH REIT (SGX: SK6U), a REIT that owns retail malls in Singapore.
In its latest fiscal first quarter results (for the three months ended 30 November 2016), Singapore Press Holdings reported a 6% year-on-year decline in operating revenue. The bottom-line picture was way worse however, as net profit attributable to shareholders fell by 43.8% partly due to an impairment charge. Even if the impairment was excluded, the company’s profit would still have declined by 12.4%
Singapore Press Holdings’ weak result is due to a continuation of a decline in its Media business. The company expects its business conditions to remain challenging.
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 Airlines, Singapore Post, and Singapore Press Holdings 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. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.