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), Delfi Ltd (SGX: P34), and Singapore Exchange Limited (SGX: S68).
|Company||Stock price||Current price vs. 52-week low|
|Singapore Press Holdings||S$3.20||0.63%|
Source: SGX Stock Facts; Yahoo Finance
Singapore Press Holdings is the publisher of most of Singapore’s major newspapers, such as The Straits Times and The Business Times. But there’s more. The company is in the real estate business and also owns online platforms such as SgCarMart. As part of its real estate business, Singapore Press Holdings is the manager and majority owner of SPH REIT (SGX: SK6U), a real estate investment trust that owns retail malls in Singapore.
The company released its second quarter results for its fiscal year ending 31 August 2017 (FY2017) fairly recently (the period was for the three months ended 28 February 2017). During the quarter, Singapore Press Holdings’ revenue was down by 8.2% year-on-year to S$238 million while its profit attributable to shareholders slipped by 1.2% to S$53.5 million.
The decline in Singapore Press Holdings’ revenue reflects the secular headwinds faced by its traditional print media business. In the reporting quarter, the company’s newspaper ad revenue fell by 18.5% from a year ago, continuing a multi-year trend of falling ad revenue that started in its FY2012.
The company intends to address the challenges it is facing through cost discipline and diversifying into new revenue streams. For example, the company has plans to launch two new radio stations at the start of 2018.
At Singapore Press Holdings’ current stock price, it is valued at 22.2 times trailing earnings.
Next up we have Delfi, which was formerly known as Petra Foods. The company manufactures, markets, and distributes chocolate confectionary products. Its portfolio of product brands include SilverQueen, Ceres, Delfi, Goya, and KnickKnacks.
Delfi has business interests in over 17 countries, but counts its main markets as Indonesia, The Philippines, Malaysia, and Singapore. In Indonesia, Delfi’s products have a market share of 50%.
The company’s 2017 first quarter earnings was released in early May. It was not a good quarter for Delfi – its revenue declined by 10.1% to US$93.1 million while its profit attributable to shareholders fell by a steep 33.4% to US$5.6 million.
Delfi cited a “product portfolio rationalisation exercise, and an on-going review of trading terms,” as reasons for its weaker performance. Delfi also mentioned that sales in Indonesia in the first quarter of 2016 “reflected higher than usual deliveries” to customers as they replenished their supplies following a year of low orders in 2015 due to the “weak consumption environment in Indonesia.”
Looking forward, Delfi “expects the present economic and currency volatility in its core markets to affect consumer spending.” But, the company also expects its financial performance in 2017 to “be similar” to 2016. Right now, Delfi has a price-to-earnings ratio of 40.
Lastly, we have Singapore Exchange, the only stock exchange operator in town. The company currently has three business lines, namely, Equities & Fixed Income, Derivatives, and Market Data & Connectivity.
In late April, Singapore Exchange released its results for the quarter ended 31 March 2017 (it was the third quarter of its fiscal year ending 30 June 2017). Singapore Exchange reported a 1.5% year-on-year decline in revenue to S$202.7 million. Although the company managed to keep its operating costs in check, profit attributable to shareholders fell by 6.8% to S$83.1 million due to a one-off S$4 million loss from the sale of shares of the Bombay Stock Exchange.
As part of its future plans, Singapore Exchange intends to continue diversifying its business and to main its cost discipline. The company’s trading at 23.5 times trailing earnings right now.
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, Delfi, and Singapore Exchange 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 Singapore Exchange. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.