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: Golden Energy and Resources Ltd (SGX: AUE), Telechoice International Ltd (SGX: T41), and Singapore Telecommunications Limited (SGX: Z74).
|Company||Stock price||Current price vs. 52-week low|
|Golden Energy and Resources||S$0.41||0.00%|
Source: SGX Stock Facts; Yahoo Finance
Golden Energy and Resources is commodity company. It explores, mines, processes, and markets thermal coal. Its operations are based mostly in certain parts of Indonesia, in particular, South Kalimantan, Central Kalimantan, and Jambi (a province in Sumatra).
As of end-2016, the company owns mining rights to more than 2.0 billion tonnes of thermal coal resources, and 780 million tonnes of coal reserves. The company also owns forestry concession rights to 265,095 hectares across four regents in South Kalimantan.
In the middle of May, Golden Energy and Resources announced its 2017 first quarter results. It was a good quarter for the company as its revenue spiked by 47.9% year-on-year to US$143.2 million. The higher revenue drove a 1,032% increase in profit attributable to shareholders to US$19.04 million. Golden Energy and Resources had benefited from a 29.6% increase in its average selling price of coal, and a 50% jump in production volume.
In its earnings release, the company commented on its market conditions. It said that it “continues to see robust thermal coal demand among its key export markets, particularly China and India, where the reliance on coal-fired power remains elevated as the domestic energy demands of both countries continue to be on an uptrend.” The company also said that it “intends to continue ramping up its coal production capacity, amid the firm demand and pricing for thermal coal.”
Telechoice International Ltd is a regional provider of info-communications products and services. The company has three business segments, namely, Personal Communications Solutions Services, Info-Communications Technology Services, and Network Engineering Services.
In its latest results announcement (released in mid-May), Telechoice International reported a 15.3% year-on-year decline in revenue to S$113.4 million. This was due to a lack of new phone sales and lower spending by customers in both the commercial and public sectors. Consequently, the company’s profit attributable to shareholders fell by 68% to S$387,000.
Telechoice International expects its performance in the second quarter of this year to be stronger than in the first quarter. But, the company also expects its overall performance in 2017 to be weaker than in 2016.
The last company on our list today is Singtel. It is a company that needs no introduction given that it is the largest provider of telecommunications services here in Singapore.
But, what may surprise some investors is that the company sources most of its profit from outside Singapore. In Singtel’s fiscal year ended 31 March 2016 (FY2016), Singapore contributed only 29% of its total net profit.
Singtel released its results for the fourth quarter of FY2017 in late May. During the reporting quarter, the telco saw its revenue grow 5.2% to S$4.31 billion. Its profit attributable to shareholders performed similarly, up 1.8% to S$963.3 million.
One of the main headwinds Singtel – and the rest of the mobile telecommunications industry – is facing is the consumer-switch from voice to data. Another Singtel-specific headwind is the entrance of a fourth mobile operator in Singapore. The Australia-based TPG Telecom won the bid in late 2016 to be come Singapore’s fourth telco.
But, as the biggest player in Singapore’s mobile market with an estimated market share of 48.6%, Singtel should be in a good position to weather challenges.
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 Golden Energy and Resources, Telechoice International, 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.