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: Rowsley Limited (SGX: A50), Challenger Technologies Limited (SGX: 573), and Singapore Telecommunications Limited (SGX: Z74).
|Company||Stock price||Current price vs. 52-week low||Price-to-book ratio|
Source: SGX Stock Facts; Yahoo Finance
Real estate developer and investor Rowsley released its 2017 first quarter earnings in late April. It was not a good quarter. Although revenue grew 10% year-on-year to S$22.6 million due to contributions from Squire Mech (an engineering consultancy that was acquired in August 2016), profit attributable to shareholders reversed from a positive S$4.77 million a year ago into a negative S$1.55 million. Rowsley’s book value per share also declined from S$0.1064 in the first quarter of 2016 to S$0.085.
As part of its growth plans, Rowsley is targeting “major local projects such as Changi Airport Terminal 5 and Singapore Institute of Technology.” The company is also looking to “expand its business in resurgent markets such as Vietnam and the Middle East.”
Challenger Technologies is primarily a retailer of IT (information technology) products, such as personal computers, tablets, printers, and more.
Besides running 40 bricks-and-mortar stores located around Singapore, Challenger Technologies also has an online market place for IT products called hachi.tech that was launched in April 2016.
In the company’s latest results for the first quarter of 2017, it recorded double-digit year-on-year declines in both revenue (down 15%) and profit (down 14.7%). Challenger Technologies had experienced lower retail sales, corporate sales, and contributions from tradeshows. Hachi-tech had showed growth, but it wasn’t enough to offset the weak showing from the bricks-and-mortar side.
Hachi-Tech is seen as an important growth pillar for Challenger Technologies. In the company’s 2017 first quarter earnings release, management said:
“Hachi.tech has just turned one but is already an important growth engine for us. We have confidence in growing online revenue, having put in place clear strategies for member acquisition, retention and growth. Hachi.tech will also play a critical role in contributing to our omnichannel approach, which has now strengthened our Bugis flagship opening.”
The last company on the list is Singtel, Singapore’s largest telco. Earlier this week, Singtel released its fourth quarter and full year results for its fiscal year ended 31 March 2017 (FY2017). Revenue for the year was down 1.5% to S$16.71 billion, and net profit dipped slightly by 0.4% to S$3.85 billion.
It’s interesting to note that Singtel’s Singapore business saw a 1% increase in revenue and a 5% jump in EBITDA (earnings before interest, taxes, depreciation, and amortisation). This has happened even as its local rivals, StarHub Ltd (SGX: CC3) and M1 Ltd (SGX: B2F), both saw large profit declines in their latest quarterly earnings. (See here for StarHub’s results, and here for M1’s.)
Looking ahead, Singtel expects to grow its revenue in the mid-single digit range in the current fiscal year. It expects low-single digit growth in EBITDA.
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 Rowsley, Challenger Technologies, and Singtel 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.