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3 Blue-Chip Stocks Near their 52-Week Lows: Are They a Steal?

Dubbed a Superinvestor by Warren Buffett, Walter Schloss was known to be a deep value investor. Schloss was very keen on stocks that were selling at 52-week low prices.

In Singapore, even among the blue-chip companies of the Straits Times Index (SGX: ^STI), there are a few stocks that are flirting with their respective 52-week low prices.

Let’s look at three of them – Comfortdelgro Corporation Ltd (SGX: C52), SATS Ltd  (SGX: S58) and Singapore Telecommunications Limited (SGX: Z74) – starting with the stock that is closest to its 52-week low price.

After the Today newspaper reported in the middle of this month that “[o]ver 2,000 ComfortDelGro cabbies express interest in joining Grab”, ComfortDelGro’s shares fell some 10%. The potential exodus follows Grab’s huge rental discounts to court ComfortDelGro’s taxi drivers.

The news certainly would not have been a welcomed one.

For the second quarter ended 30 June 2017, revenue for the land transport giant came down 3.4% year-on-year to S$987.2 million while net profit tumbled 6.8% to S$79.4 million. All its business segments brought in lower sales except the Public Transport Services division and the Driving Centre division.

The company ended off its second quarter results announcement by saying that its “operating environment remains challenging”.

Moving on, SATS Ltd provides inflight catering, institutional catering, and airport terminal services, among others. It derives majority of its revenue from the aviation sector.

For its first quarter, the firm reported a 0.5% year-on-year revenue increment to S$426.5 million but net profit declined 10.6% to S$57.3 million. The lower profit was mainly due to an absence of a gain on the sale of certain assets that took place in the first quarter of last year.

SATS said that there is no indication that low yields across the airline industry will improve in the short-term, so pricing pressure is expected to continue.

However, innovation and technological investments could help the firm to further decrease costs and increase productivity. The opening of Changi Airport Terminal 4 at the end of October 2017 might also bolster SATS’ bottom line.

Singapore Telecommunications Limited, or Singtel for short, posted a dismal first quarter results recently.

For the three months ended 30 June 2017, net profit slid 5.6% year-on-year to S$891.6 million, even though revenue grew 8.3% to S$4.2 billion. Alternative voice call apps, among others, have threatened Singtel’s Singapore consumer business.

With the big boys selling near their respective 52-week lows, are they a bargain?

To get a quick answer, we can compare the PE ratio of the STI ETF (SGX: ^STI), an exchange-traded fund which tracks the fundamentals of the Straits Times Index, to the PE ratio of the respective companies.

As of 27 September 2017, the STI ETF had a PE ratio of 11.1. This could suggest that ComfortDelGro, SATS and Singtel are not cheap at the moment, despite their dwindling stock prices.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of SATS Ltd. Motley Fool Singapore contributor Sudhan P owns units of STI ETF.