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: Jardine Cycle & Carriage Ltd (SGX: C07), ComfortDelGro Corporation Ltd (SGX: C52), and SIA Engineering Company Ltd (SGX: S59).
Source: SGX Stock Facts; Yahoo Finance
Jardine Cycle & Carriage is a bona-fide conglomerate. In 2016, 71% of its underlying profit came from the Indonesia-listed Astra. Astra operates in Indonesia and itself has seven different business segments: Automotive; Financial Services; Heavy Equipment & Mining; Agribusiness; Infrastructure & Logistics; Information Technology; and Property.
On 8 November, Jardine Cycle & Carriage released its 2017 third quarter results. It was a good quarter from the conglomerate. Revenue was up 13.1% year-on-year to US$4.44 billion, while profit attributable to shareholders grew 13.4% to US$211.1 million.
Management said that “the outlook for the rest of the year is expected to remain positive as Astra’s results will continue to benefit from increased commodity prices, although there are concerns over greater competition in the car market as well as increased provisioning in certain of its financing activities.”
At its current price of S$39.21, Jardine Cycle & Carriage has a trailing price-to-earnings (PE) ratio of 14.3.
Next up is ComfortDelGro. The land transport giant has operations in seven countries, and a total fleet size of 43,500 buses, taxis and rental vehicles.
On Friday, ComfortDelGro released its third quarter earnings. In a similar manner to the first and second quarters of the year, the company’s revenue declined again. In the reporting quarter, ComfortDelGro’s revenue came in at S$991.4 million, 2.4% lower than a year ago. Profit attributable to shareholders fell by 8.2% to S$80.1 million as a result.
Lower revenue from many of ComfortDelGro’s business segments (the weakness was found in the Taxi Business, Automotive Engineering Services Business, Car Rental and Leasing Business, Bus Station Business, and Inspection and Testing Services Business) contributed to the company’s overall revenue decline.
Looking ahead, the picture is not pretty – ComfortDelGro expects most of its business segments to deliver revenue. At its current stock price of S$2.00, ComfortDelGro is trading at 13.8 times its trailing earnings.
Lastly, we have SIA Engineering, a provider of aircraft maintenance, repair, and overhaul (MRO) services. In the company’s latest quarterly results, released last week, revenue rose 3.7% year-on-year to S$274.7 million while profit attributable to shareholders increased by 7.3% to S$38.1 million.
During the reporting quarter – the three months ended 30 September 2017 – SIA Engineering’s revenue grew on the back of growth in airframe and component overhaul and line maintenance revenue, which were partially offset by lower fleet management revenue. The bottom-line benefited from a 48.0% jump to S$18.2 million in share of profits of associated companies.
Commenting on its future, SIA Engineering said in its earnings release that the “The MRO industry is faced with the challenges of new-generation aircraft and engines that require les frequent maintenance and lighter work content. There continues to be intense regional competition. Nonetheless, the significant increase in aircraft fleet will result in growth for the MRO industry.”
SIA Engineering’s shares closed at S$3.29 each on Friday, giving the company a trailing PE ratio of 21.9.
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 decline yet further if the underlying business performance continues to weaken.
Nothing we’ve seen here about Jardine Cycle & Carriage, ComfortDelGro, and SIA Engineering 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.