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

Walter Schloss, 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 at or near their respective 52-week low prices.

Let’s look at three of them – Singapore Telecommunications Limited (SGX: Z74), Wilmar International Limited (SGX: F34) and Singapore Technologies Engineering Ltd (SGX: S63) – starting with the stock that is closest to its 52-week low price.

Singapore Telecommunications Limited, or Singtel for short, would have posted dismal second-quarter results recently, if not for the one-off gains from the divestment of its stake in NetLink NBN Trust (SGX: CJLU).

Net profit for the three months ended 30 September 2017 almost trebled to a record of S$2.89 billion. Underlying net profit, which is net profit before exceptional items, fell 4.1% year-on-year to S$929 million, impacted by lower associates’ contributions. Revenue for the quarter rose by 6.9% year-on-year to S$4.37 billion as all business segments performed well.

With more competition set to enter the already-saturated market next year, the incumbents like Singtel, StarHub Ltd (SGX: CC3) and M1 Ltd (SGX: B2F) have a lot to do to protect and grow their turf.

Agribusiness group, Wilmar International, saw its revenue for the third quarter ended 30 September 2017 rise 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.

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

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

With the blue-chips selling near their respective 52-week lows, are they a steal?

To get a quick answer, we can compare the PE ratio of the SPDR 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 Singapore Telecommunications Limited, Wilmar International Limited Singapore Technologies Engineering Ltd are not exactly that cheap, despite their languishing stock prices.

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Editor's note: The article has been edited for clarity. 

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 SPDR STI ETF.