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: Kimly Ltd (SGX: D10), StarHub Ltd (SGX: CC3), and Vicom Limited (SGX: V01).
Source: SGX Stock Facts; Yahoo Finance
Founded in 1990 and listed just two months ago in March, Kimly is the largest traditional coffee shop operator in Singapore. It currently has a chain of 64 food outlets and 121 food stalls under various brands island wide.
According to Kimly’s IPO prospectus, its revenue has stepped by from S$149 million in 2014 to S$172 million in 2016. Its profit however, increased at a slower pace from S$20 million to S$24 million.
Kimly thinks there is opportunity for growth in the western area of Singapore given the government’s plans to develop Singapore’s second Central Business District in the Jurong Lake District. The company also has an online food ordering and delivery system that it plans to expand.
Although Kimly’s stock price is near a 52-week low, investors should note that the current price is over 80% higher than the listing price of S$0.25.
StarHub is likely to be a company that’s familiar to many Singapore investors. The telco announced its 2017 first quarter results earlier this week. It was a tough quarter for the company as its revenue slipped by 0.2%, driving a 21% fall in profit.
Over the last 12 months, StarHub’s stock price has fallen by around 16%, mainly due to its weaker financial performance and the looming threat of an entrance by Singapore’s fourth telco – the Australia-based TPG Telecom. At StarHub’s current stock price of S$2.80, it has a trailing dividend yield of 6.8%. But, investors should note that the company plans to distribute a dividend of S$0.16 per share for the whole of 2017, which is 20% lower than its dividend of S$0.20 per share in 2016.
Lastly, we have Vicom, a leading provider of vehicle testing and inspection services in Singapore. The company also provides non-vehicle technical testing and inspection services to a wide range of industries.
Vicom’s latest results are for 2016, and there was a continuation of the trend of lower revenue and profits that started over the past two years or so. The company’s revenue was down by 5.2% to S$101.2 million in 2016 while its profit attributable to shareholders declined 10.4% to S$28.2 million. Vicom was affected by a record number of vehicle de-registrations and the Early Turnover Scheme for commercial vehicles; the company performed 488,186 vehicle inspections in 2016, down 6.5% from the 522,140 seen in 2015.
Vicom will be releasing its 2017 first quarter earnings next week on 8 May 2017. In the report, investors may want to watch whether the company can halt the decline in its revenue and profit seen in the past few years.
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 Kimly, StarHub, and Vicom 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.