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’s website; data as at 23 January 2018
The first on the list is Singapore Telecommunications Limited (SGX: Z74).
In its latest earnings update, SingTel reported a mixed performance.
On one hand, group revenue for the quarter was up 4.4% year-on-year to S$4.6 billion. Yet, underlying net profit attributable came in lower by 8% year-on-year. The improvement in revenue was driven by the Australia consumer business and its digital life business. The lower underlying net profit, on the other hand, was due to lower contribution from associates. Another positive is that free cash flow came in higher at S$795 million, up 42.1% as compared to the same period last year.
So far, the market has not been very enthusiastic about the company, sending its share price down by 14% in the last 12 months. In fact, SingTel is currently trading around the lowest point for the past five years.
At a price of S$3.41, it is trading at a price-to-earnings (P/E) ratio of around 10.
The next company on the list today is Thai Beverage Public Company Limited (SGX: Y92).
Thai Beverage is a company operating in four different segments, namely, Spirits, Beer, Food, and Food Beverages.
In its latest earnings update, Thai Beverage reported a weak performance. For the quarter, revenue was down 2.6% year-on-year to 46.8 billion baht while net profit dropped 61% year-on-year to 3.0 billion baht. Similarly, EBITDA (earnings before interest, tax, depreciation and amortization) for the quarter declined by 46.8% as compared to last year to 5.6 billion baht.
As at 31 December 2017, Thai Beverage had a net debt position of 213.0 billion baht, up from 30.7 billion baht as at 30 September 2017. Gearing ratio stood at 145%.
After performing well for a number of years, Thai Beverage’s share price hit a peak in 2016 at around S$1.04. Since then, the share price has declined more than 20% to its current price of $0.82.
At $0.82, it is trading at a P/E ratio of 16.4.
The last company on the list today is Sheng Siong Group Ltd (SGX: OV8).
Sheng Siong is one of the largest supermarket chains in Singapore. The company’s network of 47 stores are primarily located at the heartlands of the island. The company was established in 1985 and listed in 2011.
It recently reported its fourth quarter results for the year ended 31 December 2017. For the quarter, revenue was up by 1.7% year-on-year to S$200.3 million. Gross profit improved 6.3% year-on-year to S$55.1 million and net profit rose 9.3% year-on-year to S$16.8 million. For the full-year, Sheng Siong generated operating cash flow of S$78.5 million, up from S$78.1 million a year ago. Sheng Siong had no borrowings while its cash and cash equivalents stood at S$73.4 million, as at 31 December 2017.
Going forward, the opening of six new stores (three in 2017 and three more in the early part of 2018), and the completion of a new warehouse by this year should position the group for growth in the near-term.
At the current price of S$0.935, it is selling at a P/E ratio of 20.1.
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.
Worried about the overall state of the market? Do you know the 1 thing you should never do in the stock market? The Motley Fool Singapore's new e-book lays out a plan to handle market crashes, details the greatest advantage you have as an investor, and looks at decades worth of market data to bring you the smartest insights on investing. You can download the full e-book FREE of charge--Simply click here now to claim your copy
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.