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: Sinamars Land Ltd (SGX: A26), Advancer Global Ltd (SGX: 43Q), and Sarine Technologies Ltd (SGX: U77).
Source: SGX Stock Facts; Yahoo Finance
Sinarmas Land is the largest property developer in Indonesia in terms of strategic land bank. It operates mainly through three Indonesia-listed subsidiaries, namely, PT Bumi Serpong Damai Tbk, PT Duta Pertiwi Tbk, and PT Puradelta Lestari Tbk.
Sinarmas Land’s property development interests reside mainly in Indonesia, but extend across a wide variety of real estate projects, including township development, residential, commercial, industrial, and hospitality.
The company’s latest results are for the first quarter of 2017. In the reporting quarter, 96% of its gross profit was derived from Indonesia. The company’s revenue also grew by 31.8% year-on-year to S$237.1 million. This led to a 136.6% jump to S$37.2 million in profit attributable to shareholders. Sinarmas Land’s top-line growth was driven mainly by an increase in the number of residential units handed over to homebuyers.
According to Sinarmas Land’s latest earnings, the property sector in Indonesia had been affected in recent years “by subdued purchasing power due to the slowdown in economic growth and depressed commodity prices.”
But, Sinarmas Land is “cautiously upbeat about the recovery and remains on track with handing over completed residential units and has a strategic focus on increasing recurring income contribution through development and acquisition of commercial properties.” In other good news, Sinarmas Land also commented:
“There is also renewed interest from foreign investors in the Group’s land bank in Jakarta which could create opportunities for joint ventures and land sales. The Group continues to maintain a defensive balance sheet with low gearing.
As stability returns to the political situation in the UK, Europe and United States, the Group is actively seeking investment opportunities in several key gateway cities to also boost recurring income from its International division.”
Advancer Global has two main business divisions: Employment Services, and Facilities Management Services.
The first provides a range of services that deal with the sourcing, recruiting, training, and deployment of foreign domestic workers to households, and foreign workers to corporations.
The second division is split into Building Management Services and Security Services. The former deals with services such as property management, cleaning, and pest control, while the latter – as its name suggests – provides security services. Advancer Global’s customers in the Facilities Management Services division includes residential and commercial properties, hospitals, and hotels.
Since the close at its trading debut on 11 July 2016, Advancer Global’s shares have fallen by 20%. But even then, the company’s still trading at 20 times trailing earnings at current prices, which is higher than the market’s price-to-earnings ratio of around 13.
Advancer Global only releases its financial results every six months. In 2016, the company experienced a 13.7% increase in revenue to S$50.9 million. But, its profit attributable to shareholders actually fell by 38.8% to S$2.68 million. This was mainly due to a 44.7% surge in the company’s administrative expenses.
Looking ahead, Advancer Global sees higher demand for foreign domestic workers in Singapore due to factors such as “the increase of dual-income households and manpower shortages.” Meanwhile, the company also sees a potential growth in demand for its Facilities Management Services division due to “increasing supply of residential and commercial properties in Singapore.”
Lastly, we have Sarine Technologies, an Israel-based company that develops technological products that are used for the processing of rough diamonds and gemstones into the polished stones you see in jewellery shops. The company has products and solutions that cater to every stage of the diamond manufacturing process.
In its latest quarterly results for the first quarter of 2017, Sarine Technologies reported a 5% year-on-year increase in revenue to US$16.27 million due to higher capital equipment sales and higher recurring income. But, the company’s profit fell by 17.3% to US$2.45 million due mainly to (a) higher expense growth to support new service launches and (b) an appreciation of the Israeli new shekel against the US dollar.
As for its outlook for 2017, Sarine Technologies expects the positive conditions in the overall diamond market to continue, and for an improvement in sales from its relatively new Sarine Profile service. The company also expects to commercialise new products in the later part of the year.
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 Sinarmas Land, Advancer Global, and Sarine Technologies 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.