As an investor, one of the methods that I use to search for investment ideas is stock screening. One of my personal favourite screens is the 52-week low list. This screen, which is usually performed weekly, will give me a list of companies that are trading at their 12-month low. Why do I like this screen? As a value investor, I like to search for companies that are trading at a good value. The 52-week low could be a good place to start since these companies might have been ignored by the investment community for various reasons. Some deserve to…
As an investor, one of the methods that I use to search for investment ideas is stock screening.
One of my personal favourite screens is the 52-week low list. This screen, which is usually performed weekly, will give me a list of companies that are trading at their 12-month low.
Why do I like this screen? As a value investor, I like to search for companies that are trading at a good value. The 52-week low could be a good place to start since these companies might have been ignored by the investment community for various reasons. Some deserve to be.
Occasionally, however, the market might be overly negative. These companies could have good long-term prospects, despite some short-term headwinds. My job, then, is to try to separate the wheat from the chaff.
Here are three companies that showed up in my list recently:
The first on the list is Sarine Technologies Ltd. (SGX: U77).
Sarine Technologies is an Israel-based company engaged in developing, manufacturing, marketing and selling precision technology products for processing of diamonds and gemstones. Its products provide solutions for every stage of rough diamond manufacturing process.
In the last 12 months, Sarine’s share price has declined by about 15%. Though there are many reasons that might have caused the decline in share price, I think that its first quarter result for 2017 might have been the main culprit. In its result, Sarine reported a growth in revenue of 5%, yet operating profit was down 14% year-on-year due to the higher expense to support growth and new services, and foreign exchange changes.
Going forward, Sarine expects positive performance due to the strength of the diamond market and improvement in sales from Sarine Profile and commercialisation of new technology in 2017. Thus, investors will need to pay attention to the coming quarterly result for signs of such improvement.
The next company on the list is Raffles Medical Group Ltd (SGX: BSL)
As a quick introduction, Raffles Medical runs hospital and healthcare services in Singapore. It also has a network of clinics in five countries and thirteen cities. Also, it has 2 hospitals under development in China, which is projected to be completed between 2018 and 2019.
For the latest quarterly results, revenue came in at S$120.1 million, up 1% year-on-year whilst net profit rose 0.5% year-on-year to S$16.8 million. Earnings per share remained unchanged as the same period last year at 0.96 cents. The company also announced an interim dividend of 0.5 cents per share.
The last company on our list is StarHub Ltd (SGX: CC3).
StarHub Ltd is one of the three companies in the telecommunication industry, behind Singapore Telecommunications Limited (SGX: ZY4) and ahead of M1 Ltd (SGX: B2F). It has five business segments, namely, Mobile, Pay TV, Broadband, Fixed Network Services and Handset sales.
Starhub is one of the worst performing companies in the last 12 months with its share price coming down by about 31% during the period. The decline is comparable to that of M1, its smaller peer in the telecom industry.
To diversify its income, Starhub has recently acquired the remaining 49% of a local cyber-security provider – Accel Systems & Technologies, taking its overall stake to 100%. Entering into cyber-security business is the latest move taken by all three incumbents to diversify their income. Given that cyber-security is still a relatively new industry, we have to wait and see whether such diversification can result in long-term sustainable growth for the telecoms.
Though companies trading at 52-week low is a good place to search for investment ideas, the low price itself should not be the sole reason to invest in such companies. There is no guarantee that the share prices will not fall further just because they are trading at 52-week lows.
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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. Motley Fool Singapore has a buy recommendation for Raffles Medical.