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 Press Holdings Limited (SGX: T39), Golden Agri-Resources Ltd (SGX: E5H), and Raffles Medical Group Ltd (SGX: BSL)
Source: SGX Stock Facts; Yahoo Finance (data as of 24 April 2017)
Investors in Singapore are likely to be very familiar with Singapore Press Holdings as the company is a publisher of major newspapers here. But, the company is also in the real estate business and is involved with other activities such as events management. As part of Singapore Press Holdings’ real estate activities, it is the majority owner and manager of SPH REIT (SGX: SK6U), a real estate investment trust that owns retail malls in Singapore.
The company continues to face challenges in its businesses. In mid-April, it released its second quarter earnings for its financial year ending 31 August 2017 (FY2017).
During the quarter, Singapore Press Holdings saw its revenue decline 8.2% year-on-year, driven mainly by weakness in its media business. The company’s display, classified, and newspaper ad revenues fell by 19.3%, 16.6%, and 18.5%, respectively, in the quarter. Ultimately, Singapore Press Holdings’ profit dipped by 1.2%.
Looking ahead, Singapore Press Holdings expects the disruption of the media industry to continue. It is trying to address the issue by investing in growth areas and maintaining cost discipline. Judging by the latest numbers, the company’s strategy is still a work in progress.
The next company on the list is integrated palm oil company Golden Agri-Resources. It is known as an integrated company because it has a presence in the entire value chain of the palm oil industry, from the growing of the palm fruit to the production of consumer end-products that are based on palm oil. Golden Agri-Resources also happens to be a large oil palm plantation owner: It has a total planted area of 488,252 hectares as of 31 December 2016.
After a tough year in 2015, Golden Agri-Resources reported a stronger financial performance for 2016, with its revenue up by 11%. The bottom-line performance was even better as the company’s profit jumped from a restated US$10.4 million in 2015 to US$399.6 million. The main driver for the company’s growth in 2016 was the increase in CPO (crude palm oil) prices.
In its earnings release, Golden Agri-Resources commented that the “palm oil industry is expected to benefit from the increasing demand particularly the domestic consumption growth through the implementation of the biodiesel policy in Indonesia.” On its part, the company also said that it “will continue optimising margins through further streamlining of its vertically integrated operations, as well as improving its yield and cost efficiency.”
The last company on our list today is healthcare services provider Raffles Medical Group. Currently, the company runs its flagship hospital Raffles Hospital in Singapore, along with a chain of clinics here. The company also has an overseas presence – in all, it has a network of medical centres and clinics in five countries in Asia (including Singapore).
Raffles Medical reported its 2017 first quarter earnings just yesterday. Revenue was down by 1.7% year-on-year, but profit attributable to shareholders managed to inch up by 0.1%. Raffles Medical cited lower than expected demand from medical tourists in Singapore as the reason for its revenue decline.
Looking ahead, the company commented in its earnings release that “demand for healthcare services may be affected by the economic slowdown in Singapore and the region, as well as increased competition from regional countries for foreign patients.” But, Raffles Medical is charging ahead for growth. It is expanding Raffles Hospital, and has two new hospitals in China (one in Shanghai and one in Chongqing) that are currently under development.
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 Press Holdings, Golden Agri-Resources, and Raffles Medical 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. The Motley Fool Singapore has recommended shares of Raffles Medical Group. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.