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 IHH Healthcare Berhad (SGX: Q0F).
IHH Healthcare Berhad is an international provider of premium healthcare services in markets where the demand for quality healthcare is growing rapidly – specifically in Asia and Central & Eastern Europe, the Middle East and North Africa region.
It is one of the leading private healthcare players in Singapore, Malaysia and Turkey, and the key markets of China and India. The group operates its hospitals under brands like Mount Elizabeth, Gleneagles, Pantai and Acibadem.
In its latest quarterly result, IHH Healthcare reported that its revenue grew by 12% year-on-year and net profit increased by 29% during the period. The improvement in profit was due to a one-off gain for the quarter. Excluding this gain, its net profit would have fallen by 54% to RM86.2 million due to higher depreciation, amortisation and finance costs following the opening of two new hospitals in Hong Kong and Istanbul.
At the current price of $1.86, IHH Healthcare is trading at a price to earnings (P/E) ratio of 52.3.
The next company on the list is Singapore Telecommunications Limited (SGX: Z74).
Singapore Telecommunications Limited or Singtel, is one of the three main telecoms in Singapore.
In its recent second quarter results, SingTel reported a revenue growth of 6.3% year-on-year while 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. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) 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 $3.77, SingTel is trading at a dividend yield of 4.6%.
The last company on our list today is SIA Engineering Company Ltd (SGX: S59).
SIA Engineering Company or SIAEC for short, provides aircraft maintenance, repair, and overhaul services to over 80 international airlines around the world. It is also a one of the subsidiaries of Singapore Airlines Ltd (SGX: C6L).
In the company’s latest quarterly result, it announced that revenue was flat year-on-year whilst net profit came down 81.8%. The decline in profit was due to a gain on divestment during the same period last year. Excluding the gain, profit would have declined by 4.7%.
At $3.21, SIAEC is trading at a P/E ratio of 21.2.
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.