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: Yuuzoo Corporation Ltd (SGX: AFC), GuocoLand Limited (SGX: F17), and IPS Securex Holdings Ltd (SGX: 42N).
Source: SGX Stock Facts; Yahoo Finance
Yuuzoo is an internet-based company with a focus on social networking, e-commerce, payments, and gaming. It has access to over 118 million registered users in 164 countries. Its “Tribal Marketplace” aims to combine social networking, e-Commerce and gaming in a mobile-optimised manner.
The company released its latest results – for 2016 – in late February. During the year, Yuuzoo reported a 16% increase in revenue and a 117% increase in profit attributable to shareholders to S$34.6 million.
It should be noted, however, that Yuuzoo’s results for 2015 had been restated. In particular, the company’s net profit in 2015 had been restated from US$32.8 million to S$15.9 million following the write-off of S$16.8 million in trade receivables.
For more information about the company, you can head to this article written by my colleague Wilson Ong on a meeting he had with Yuuzoo’s management.
GuocoLand is a regional property company with operations in the geographical markets of Singapore, China, Malaysia and Vietnam. It is headquartered in Singapore and its business primarily involves property development, property investment, hotel operations, and property management.
GuocoLand is a member of the Hong Leong Group which is controlled by one of the richest men in Malaysia, Quek Leng Chan. Some Malaysia-listed companies that are related to Hong Leong Group include Hong Leong Bank Bhd (KLSE: 5819.KL) and Hong Leong Financial Group Berhad (KLSE: 1082.KL).
Given this ownership structure, investors who are interested in GuocoLand need to be comfortable with the leadership of Quek.
The company’s latest results are for the quarter ended 30 December 2016. In that period, GuocoLand’s top-line slipped by 3% year-on-year, but its profit jumped by 58%.
Lastly, we have IPS Securex, which is is engaged in the business of providing security products and integrated security solutions.
Given the heightened risk of terrorism prevalent now, investors who are interested in this area may find the company to be an interesting study. The company’s latest results are for the six months ended 31 December 2016. In that period, IPS Securex experienced a 2.5% increase in revenue but a 27.6% decline in profit.
One thing worth noting about IPS Securex is that it is a company with a small market capitalisation of just S$69 million. As part of the research process when dealing with small cap companies, investors should take into consideration situations that are particularly relevant to such companies, such as low trading liquidity, less stable profit, and less coverage by analysts.
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 Yuuzoo, GuocoLand, and IPS Securex 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.