As an investor, one of the methods that I use to look for stock ideas is 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 look for companies that are trading at good value. The 52-week low could be a good place to start, since these companies might have been ignore by the investment community for various reasons. Some deserve to be. Occasionally, the market might…
As an investor, one of the methods that I use to look for stock ideas is 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 look for companies that are trading at good value. The 52-week low could be a good place to start, since these companies might have been ignore by the investment community for various reasons. Some deserve to be.
Occasionally, the market might have been 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.
So what are the companies that have shown up on this week’s list? Here are three of them:
The first on the list is Yeo Hiap Seng Ltd (SGX: Y03).
The company operates through two divisions, namely Food and Beverage and Property. Some example of brands distributed includes Yeo’s, H-TWO-O, Pink Dolphin and Justea.
Recently, the company reported its latest quarterly result. Revenue was down by 23% year-on-year to S$87.2 million. Profit attributable to shareholders was down by 35% year-on-year to S$5.3 million.
The weaker financial performance was due to the transition to new distributors in Cambodia, competitive pricing and general market weakness.
Going forward, the company expects “F&B margins to come under pressure mainly due to soft economic conditions and weak outlook for our key markets, competitive selling prices, and uncertainty in raw material prices.”
At the current price of $1.26, Yeo Hiap Seng is trading with a dividend yield of 1.6%.
The next company on the list is SATS Ltd (SGX: S58).
Sats is a company that provides food solutions and gateway services. The Food Solutions covers airline catering, food distribution, industrial catering whereas Gateway Solutions is involved in ground-handling services of passengers, flights and cargo.
In the company’s latest quarterly result, revenue was marginally higher by 0.5% year-on-year, whilst profit after tax was down 10.6% during the period. The decline in profit after tax was due to absence of gain in disposal in this quarter. Excluding one-off items, underlying net profit was up by 3.2%.
The improvement in underlying net profit was driven by improvement in Gateway Services and joint ventures/associates, offset slightly by weaker Food Solutions.
Sats share price declined to $4.77 recently after touching a 12 months high of $5.39. At the current price, it’s trading at 21.3 times earnings.
The last company on our list today is Dutech Holdings Ltd (SGX: CZ4).
Dutech is in the business of making safes, mainly focusing on ATM and banking safes. It is the largest producer of high-security products in Asia in terms of sales and production capacity.
Its production are mainly based in China and Germany, whilst its sales are made across the world – China, Europe, North and South America and Asia Pacific.
In its recent second-quarter result, Dutech reported revenue growth of 26.4% year-on-year, whilst net profit declined 57% year-on-year. The reduction in net profit was due to higher raw material costs and higher sales, distribution and administration cost as a result of new acquisitions.
In the last five years, Dutech’s share price was up by about 175%. Yet, the recent weak financial performance might have caused the share price to trade close to its 52 weeks low.
At current price of $0.36, Dutech is trading with a dividend yield of 2.8%.
Though companies trading at 52-week lows are a good place to look for investment ideas, the low price itself should not be the sole reason to invest in those companies.
As we all know, there is no guarantee that share price will not fall further just because it is trading at a 52 weeks low.
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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 has a buy recommendation for Sats.