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 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….
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 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, however, 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 Soilbuild Construction Group Ltd (SGX: S7P).
Soilbuild Construction is a builder of residential and business space properties. The company offers a full spectrum of real estate services which includes Design and Build, Construction, Turnkey Construction, Project Management Consultancy, Procurement and Mechanical & Electrical.
In its latest quarterly result, the company reported its revenue declined by 54.1% year-on-year to $48.3 million due to completion of major old projects whilst the new projects will commence only in the second half of the year.
It said that the “company’s order book stood at S$521.4 million as at 30 June 2017, of which S$336.8 million comprise order book from local construction projects while S$184.6 million comprise order book from Myanmar projects.”
At the current price of $0.195, Soilbuild is trading at a price to earnings ratio of 21.6 times and a dividend yield of 5.1%.
The next company on the list is JUMBO Group Ltd (SGX: 42R).
Famous for its chilli crab served by JUMBO Seafood, the company also operates a wide range of different brands such JPOT-Hotpot Singapore Style, NG AH SIO Bak Kut Teh, Chui Huay Lim Teochew Cuisine, J Cafe-Singapore’s Local Delights, YOSHIMARU Ramen Bar, Singapore Seafood Republic and JUMBO Catering.
In the company’s latest quarterly result, revenue was up by 6.4% year-on-year whilst profit attributable to investors was down 1.1% during the period. The decline in profit was due to cost escalation as a result of expansions of outlets and new corporate offices in Singapore and Shanghai.
Jumbo continues to pursue plans to expand its outlets. Last month, the Group opened its first JUMBO Seafood outlet in Beijing at Beijing SKP shopping mall, the fourth outlet in China. Furthermore, the first franchised JUMBO Seafood restaurant began operations in Ho Chi Minh City, Vietnam in May 2017.
At the current price of $0.54, Jumbo Group is trading at a price to earnings ratio of 21.6 times.
The last company on our list today is Singapore Telecommunications Limited (SGX: Z74).
In its recent second quarter result, SingTel reported revenue growth of 6.3% year-on-year whilst net profit declined by 7.4% year-on-year. The reduction in net profit was due to lower contribution from regional associates and exceptional charges from workforce restructuring at Optus.
All three segments, namely Consumer, Enterprise and Digital Life, grew revenue on a year-on-year basis. Despite all segments registering revenue growth, EBITDA margins were down for both the Consumer and Enterprise segments. This was mainly driven by operating expenses growing faster than revenue.
Furthermore, associates’ profit contribution was down year-on-year mainly due to the weakness in Airtel, AIS and Globe.
At the current price of $3.69, SingTel is down about 8% in the last 12 months and has a dividend yield of 4.7%.
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.