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

Walter Schloss, who was dubbed a Superinvestor by Warren Buffett, was a deep value investor. He 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 – Wilmar International Limited (SGX: F34), Singapore Technologies Engineering Ltd (SGX: S63) and Comfortdelgro Corporation Ltd (SGX: C52) – starting with the stock that is closest to its 52-week low price.

Company Share Price on 5 Dec 2017 (as of time of writing) 52-Week Low Price Trailing Price-to-Earnings (PE) Ratio Dividend Yield
Wilmar International Limited S$3.13 S$3.08 10 2%
Singapore Technologies Engineering Ltd S$3.24 S$3.17 20 5%
Comfortdelgro Corporation Ltd S$2.00 S$1.955 14 5%

Agribusiness group, Wilmar International, saw its revenue for the third quarter ended 30 September 2017 go up by 0.4% year-on-year to US$11.13 billion. However, its net profit and core net profit slumped 5.7% and 15.9% respectively. The top line improved due to higher sales from Oilseeds and Grains.

Unlike Wilmar, Singapore Technologies Engineering Ltd posted higher revenue and net profit for its third quarter. Quarterly sales grew 1% year-on-year to $1.62 billion while net profit surged 67% compared to the corresponding period a year ago.

The engineering group said that barring unforeseen circumstances, it foresees revenue and profit before tax for the financial year 2017 (FY2017) to be comparable to that of FY2016.

Comfortdelgro Corporation Ltd did not have a good quarter at all. Intense competition is still taking its toll on the land transport giant. Revenue for the third quarter came in at S$991.4 million, down 2.4% year-on-year, while the bottom line fell 8.2% to S$80.1 million.

The firm’s taxi business saw an 11.2% decline in revenue to S$298.3 million due to “increased competition”. In Singapore, the taxi business performed poorly due to “a smaller operating fleet, introduction of flexi rental schemes and the passing on of Land Transport Authority’s diesel tax rebate to drivers in the form of taxi rental discounts”.

With the blue-chips 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.

Currently, the STI ETF has a PE ratio of close to 11. This could suggest that Wilmar International Limited, Singapore Technologies Engineering Ltd and Comfortdelgro Corporation Ltd are not cheap now, despite their falling 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. Motley Fool Singapore contributor Sudhan P owns units of STI ETF.