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 Post Limited (SGX: S08), ComfortDelGro Corporation Ltd (SGX: C52), and Singapore Telecommunications Limited (SGX: Z74).
|Company Name||Stock price||Current price vs. 52-week low||Price-to-book ratio|
Source: SGX Stock Facts; Yahoo Finance
Singapore Post, which provides logistics services related to eCommerce activity in addition to providing Singapore’s mail services, announced its full year earnings two weeks ago.
In its fiscal year ended 31 March 2017 (FY16/17), Singapore Post saw its profit fall by nearly 80% to S$58.4 million despite enjoying a 17.1% increase in revenue to S$1.35 billion. The primary reason for the huge profit decline is the impairment charge of S$208.6 million Singapore Post took in the fourth quarter on the value of some of its assets (this includes two previous acquisitions).
But even if the impairment’s effects were stripped away, Singapore Post’s underlying net profit in FY16/17 was still down by 24.7%. The weaker financial performance resulted in the company’s dividend for the fiscal year being halved from 7.0 cents per share a year ago to 3.5 cents.
ComfortDelGro is one of the world’s largest transport companies with a fleet of over 44,700 vehicles. The company’s business operations include the running of buses, rail services, taxis, and more.
ComfortDelGro also released its latest earnings for the first quarter of 2017 two weeks ago. It was a mixed quarter for the company. Although its bottom-line grew 12.4% to S$82.5 million, its revenue declined by 2.4% year-on-year to S$972 million. Most of ComfortDelGro’s business segments experienced lower revenue in the reporting quarter.
Unfortunately, ComfortDelGro expects most of its business segment’s revenues to fall for the whole of 2017.
Lastly, we have Singtel, the largest operational telco in Singapore. The company’s latest results were released just last week. For its fiscal year ended 31 March 20167 (FY2017), Singtel experienced a 1.5% year-on-year decline in revenue to S$16.71 billion. Its profit attributable to shareholders also came in 0.5% lower at S$3.85 billion.
The good news is that Singtel’s dividend for FY2017 was kept unchanged from FY2016’s S$0.175 per share.
For its FY2018, Singtel expects mid-single digit revenue growth and low-single digit EBITDA (earnings before interest, taxes, depreciation, and amortisation) growth.
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 Post, ComfortDelGro, 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.