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.
The first on the list is Sats Ltd (SGX: S58).
Sats Ltd is a company providing food solutions and gateway services solutions.
The Food Solutions covers airline catering, food distribution, industrial catering whereas Gateway Solutions is involved in ground handling services for passengers, flights and cargo.
In its latest quarterly results, Sats reported revenue grew by 0.5% year-on-year and underlying net profit increased by 3.2% during the period. This takes into account of the absence of one-off gain in the latest quarter. The improvement in profit was due to better performance from associates/joint ventures during the quarter.
What’s useful to note here is that despite trading close to its 52-week low price, Sats’ share price increased by 67% in the last five years.
At the current price of $4.67, Sats is trading at a price to earnings ratio of 20.8 times.
The next company on the list is China Jinjiang Environment Holding Company Ltd (SGX: BWM).
China Jinjiang Environment is a waste-to-energy (WTE) operator that focuses on the development, construction, operation and management of WTE facilities in China.
The company operates through two segments: WTE business, and project technical and management services and its energy management contract (EMC) business.
Through the WTE Business, it processes municipal solid waste, under long-term concession agreements entered into with local governments, and sells electricity and steam generated during its WTE process.
It also provides EMC services to metallurgical, chemical and power generation companies. Such services include equipment selection, construction planning, residual heat utilisation, and optimization of operations and maintenance.
The company was listed in Singapore in August 2016 at an IPO price of $0.90. So far, its share price has performed weakly, down by about 13% to $0.78.
At the current price of $0.78, China Jinjiang Environment is trading at a price to earnings ratio of 7.11.
The last company on the list today is Kingsmen Creatives Ltd. (SGX: 5MZ).
Kingsmen Creatives operates through four primary business segments, namely Exhibitions and Thematic, Retail and Corporate Interiors, Research and Design, and Alternative Marketing.
In its latest quarterly results, the group delivered a decline of 10.4% in revenue as compared to the same period last year. Net profit performed even worse, down by 25.7% year-on-year. Consequently, earnings per share dropped during the quarter to 1.19 cents, down from 1.61 cents a year ago. The weaker performance was mainly driven by completion of key projects in the Exhibitions & Thematic segment.
At $0.58, Kingsmen Creatives is trading at a price to earnings ratio of 9.32 times.
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 decline yet further if the underlying business performance continues to weaken.
Nothing we’ve seen about the companies above 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. Motley Fool Singapore has a recommendation for Sats Ltd.