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 nearly once every week. 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.COM, Stockfacts
Singapore Telecommunications Limited (SGX: Z74) or Singtel, is one of the three main telcos in Singapore.
In the latest quarter ended 30 September 2018, Singtel reported flat revenue of S$4.3 billion for FY2019’s second quarter. Yet, EBITDA (earnings before interest, taxes, depreciation, and amortisation) for the quarter declined by 10.3% year-on-year to S$1.13 billion.
Singtel’s share of associates’ pre-tax earnings was also down by 49% year-on-year to S$330 million, excluding exceptional items. Consequently, Singtel’s net profit declined by 76.6% to S$667 million. Even if one-off gains and expense were removed, the telco’s underlying net profit would still be down by 21.8% year-on-year to S$715 million on the back of weaker performances in Singtel’s core businesses, and the aforementioned fall in associates’ earnings.
Singtel declared an interim dividend of 6.8 cents per share during the quarter, unchanged from a year ago.
The next company here is Wilmar International Limited (SGX: F34). As a quick introduction, Wilmar is an agricultural company that operates through four main segments: Tropical Oil, Oilseeds and Grains, Sugar, and Others.
For the quarter ended 30 September 2018, Wilmar reported that revenue increased by 4.3% to US$11.6 billion. Net profit grew by 10.7% to US$407.4 million. This was driven by stronger performance in the Tropical Oil, and Oilseeds and Grains segments, and higher contribution from associates and joint ventures. Year-to-date, the group generated US$1.65 billion in net cash flow from operating activities, resulting in free cash flow of US$773.4 million.
Sembcorp Industries Limited (SGX: U96) is the last company that we will look at in this article.
As a quick introduction, Sembcorp Industries is a conglomerate with three major business segments: Utilities; Marine; and Urban Development & Others. The Marine segment’s contribution mainly comes from SembCorp Industries’ 61% ownership stake in Sembcorp Marine Ltd (SGX: S51).
For the quarter ended 30 September 2018, Sembcorp Industries’ revenue improved by 36% year-on-year to S$3.0 billion. Yet, profit from operations for the quarter declined by 29% year-on-year to S$216.5 million, driven mainly by weaker performance in the Marine segment. Consequently, net profit for the quarter fell 12% year-on-year to S$82.3 million. Sembcorp Industries’ net debt stood at S$8.9 billion as at 30 September 2018.
Though companies trading at 52-week lows is a good place to search for investment ideas, the low price itself should not be the sole reason to invest in such companies. As we all know, there is no guarantee that the share price will not fall further just because the company is trading at an already-low price.
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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 Lawrence Nga doesn’t own shares in any companies mentioned.