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 frequently. There are many stocks that pop up on my screen each time I run it.
So, what are the companies that have shown up on this week’s list? Here are three of them:
Source: SGX Stock Facts (data as of 4 December 2017)
The first on the list is Singapore Technologies Engineering Ltd (SGX: S63), or STE.
As a quick introduction, STE is a conglomerate with business interest in various sectors, namely, Aerospace, Electronics, Land Systems, Marine and others.
Recently, STE reported its latest quarterly result. Quarterly revenue was up by 1% year-on-year to $1.62 billion whilst earnings before interest and tax was up by 78% year-on-year to S$146.1 million. As a result, profit attributable to shareholder was up by 67% as compared to previous year. Similarly, earnings per share grew 67% year-on-year to 4.12 cents.
The positive performance was driven by growth in the Aerospace and Electronic segments, offset by weaker performance in Land System and Marine segments.
In term of outlook, STE provided the following guidance:
“We continue to position the Group for long-term sustainable growth and value creation.
Our order book continues to be strong, and we maintain our outlook of comparable revenue and PBT for the year.”
Despite the overall positive results, the market was unimpressed and sent the company’s stock price lower. At $3.26, STE is trading at a price-to-earnings (P/E) ratio of 19.74 times.
The next company on the list is Raffles Medical Group Ltd (SGX: BSL).
Raffles Medical runs hospital and healthcare services in Singapore. It also has a network of clinics in five countries and thirteen cities. Also, it has two hospitals under development in China.
In its last quarterly result announcement, Raffles Medical reported flat quarterly revenue as compared to last year. Similarly, quarterly profit after tax was flat as compared to the same period last year. Hospital Services revenue grew by 3.1% year-on-year due to higher patient load, offset by a decline in Healthcare Services revenue as a result of lower renewal of expatriates’ healthcare plans.
The construction of hospitals in Chongqing and Shanghai are progressing according to plan, which are targeted to be operational by second half of 2018 and second half of 2019, respectively.
In term of market capitalisation, Raffles Medical has lost about 28% in the last 12 months, which might be caused by its lack of growth recently. At $1.05, the firm’s trading at a P/E ratio of 26.31 times.
The last company on our list today is Yoma Strategic Holdings Ltd (SGX: Z59).
As a quick introduction, Yoma is a business that is involved in a wide array of businesses including real estate development, agriculture, construction, tourism, automobiles, and even retail. The conglomerate’s business is mainly focused in Myanmar.
In its latest quarterly result announcement, quarterly revenue improved 32.9% year-on-year to $33.1 million. Yet, quarterly net profit attributable to shareholders was down by 56.8% year-on-year. The improvement in revenue was due to growth in tractor sales and KFC store expansion whilst the decline in net profit was due to the lack of fair value gain from its telecommunication tower investment.
Melvyn Pun, Yoma Strategic’s chief executive, commented:
“We are pleased to deliver a solid revenue growth supported by better operational performance. In the coming months, we expect the positive momentum from our non-real estate business to continue with the opening of more KFC restaurants and the peak dry season for our New Holland tractors.”
At $0.495, its share price has come down by 16.1% in the last 12 months.
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 the companies 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.
Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.
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 has a recommendation for Raffles Medical Group.