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 that all also have a market capitalisation of over S$1 billion: ComfortDelGro Corporation Ltd (SGX: C52), SIA Engineering Company Ltd (SGX: S59), and Wilmar International Limited (SGX: F34).
|Company||Stock price||Market capitalisation||Current price vs. 52-week low|
|SIA Engineering||S$3.43||S$3.78 billion||0.9%|
Source: SGX Stock Facts; Yahoo Finance
ComfortDelGro is a land-transport company with operations in seven countries (Singapore, China, the United Kingdom, Ireland, Australia, Vietnam, and Malaysia). It is one of the largest land-transport companies in the world with its fleet size of around 44,000 buses, taxis, and rental vehicles.
In its latest earnings (for the second quarter of 2017), ComfortDelGro reported a 3.4% year-on-year decline in revenue to S$987.2 million. Its net profit attributable to shareholders also fell by 6.8% to S$79.4 million. The weak performance by the company was driven primarily by negative currency movements (the British pound and Chinese renminbi both fell in value) and increased competition at the Taxi business.
Segments-wise, only Public Transport Services reported revenue growth and operating profit growth in the second quarter of 2017. The rest of the segments – with the exception of Driving Centre – posted year-on-year declines in both revenue and operating profit. The Taxi segment, in particular, due to challenges in Singapore from ride-hailing apps such as Uber and Grab, saw a drop in operating profit of close to 20%.
At the current price, ComfortDelGro is trading at a price-to-earnings (PE) ratio of 13.5. It also has a dividend yield of 5.2%.
SIA Engineering provides aircraft maintenance, repair, and overhaul (MRO) services to over 80 international airlines around the world.
During the second quarter of 2017, which is the first quarter of SIA Engineering’s fiscal year ending 31 March 2018 (FY2018), the company’s revenue inched up by 0.4% to S$272.8 million. But, profit attributable to shareholders sank by 81.8% from S$198.4 million to S$36.2 million.
The sharp decline in profit was due to the presence of a one-off gain of S$178 million in the same quarter a year ago. The gain came from the sale of the company’s 10% stake in Hong Kong Aero Engine Services. Excluding the one-off gain, SIA Engineering’s profit in the first quarter of FY2017 would have been S$38.0 million.
Lastly, we have Wilmar, the agribusiness giant. The company has four main business segments, namely, Tropical Oils, Oilseeds and Grains, Sugar, and Others.
The second quarter of 2017 saw Wilmar deliver a turnaround in its results compared to the same period last year. Revenue was up 13.2% to US$10.6 billion, and core net profit climbed from a negative US$220.3 million a year ago to a positive US$37.3 million.
Wilmar said that “the improvement was driven by recovery in Oilseeds & Grains from the one-off losses in 2Q2016, but was partially offset by weaker performances in Tropical Oils and Sugar.”
As for the remainder of 2017, Wilmar’s chairman and chief executive officer, Kuok Khoon Hong said:
“We expect Tropical Oils to perform better in 2H2017 on the back of improvements in production yields and better margins from downstream operations. Oilseeds crush margins are expected to remain positive for the rest of the year and Consumer Products will improve as it enters its seasonal peak period. However, Sugar will continue to be affected by the volatility in sugar prices.”
At the current price, Wilmar’s shares carry a PE ratio of 10.9.
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 fall yet further if the underlying business performance continues to weaken.
Nothing we’ve seen here about ComfortDelGro, SIA Engineering, and Wilmar 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.