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3 Blue-Chip Stocks Near their 52-Week Lows: Are They Bargain Buys?

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 near their respective 52-week low prices.

Let’s look at three of them – StarHub Ltd (SGX: CC3), Jardine Cycle & Carriage Ltd (SGX: C07), and Thai Beverage Public Company Limited (SGX: Y92) – starting with the stock that is closest to its 52-week low price.Source: Google Finance and SGX StockFacts

After market close on Valentine’s day, StarHub announced its financial results for the full year ended 31 December 2017. There was no love for the stock, though, as its price plunged some 10% the next day.

StarHub’s 2017 net profit attributable to shareholders fell 27.1% year-on-year to S$249 million on the back of its total revenue inching up 0.2% to S$2.4 billion. A final dividend of 4.0 Singapore cents per share was proposed, bringing the total dividend for 2017 to 16.0 cents per share, down from 20.0 cents per share a year back. The telco intends to maintain a quarterly cash dividend of 4.0 cents per share in 2018. For the full earnings coverage, you can head here.

Unlike StarHub, Jardine Cycle & Carriage had a stellar 2017. Revenue grew from US$15.8 billion in 2016 to US$17.7 billion in 2017, an increase of 12%. Meanwhile, underlying profit, which excludes non-trading items, climbed 16% to US$787.9 million.

Shareholders would be delighted to know that they would be getting more dividend for 2017 as compared to a year ago. Jardine Cycle & Carriage’s board has recommended a final dividend of 68 US cents per share. Together with the interim dividend of 56 US cents per share already paid out, the total dividend for 2017 would be 86 US cents per share, up 16% year-on-year.

Thai Beverage made public its financial results for the first quarter of its fiscal year ending 30 September 2018 on 14 February as well. Revenue tumbled 2.6% year-on-year to THB 45.6 billion while net profit plunged 61% year-on-year to THB 3.0 billion. Excluding finance cost related to its Sabeco acquisition and non-recurring expense related to acquisitions, net profit would have dropped 29.3% year-on-year to THB 5.5 billion.

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

To get a quick answer, we can compare the valuation of the SPDR STI ETF (SGX: ES3), an exchange-traded fund which tracks the fundamentals of the Straits Times Index, to the valuation of the respective companies.

As of 21 March 2018, the SPDR STI ETF had a PE ratio of close to 12 and a dividend yield of around 3%. This could suggest that the trio of blue-chips are not that cheap, 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 doesn’t own shares in any companies mentioned.