Last month, my Foolish colleague, Chong Ser Jing, revealed the 30 best stocks to buy in Singapore for 2019. The shares were discovered with the help of the Magic Formula, an investing strategy made famous by Joel Greenblatt in his book, The Little Book That Beats The Market.
From that list of 30 shares, I picked out three companies that look interesting. Here they are.
The first company on my list is Boustead Singapore Limited (SGX: F9D), a global service provider of infrastructure-related engineering services and geo-spatial technology solutions. It recently added a healthcare business to its suite of services.
Boustead Singapore’s share price has fallen from a high of S$1.93 in April 2014 to S$0.80 right now. The slowdown in the global oil and gas industry and Singapore’s industrial real estate sector are the main culprits for the poor performance of Boustead Singapore’s business. With the declining business in the short-term, Boustead Singapore’s share price also took a beating.
However, for the long-term, the company should do well.
For one, Boustead Singapore’s order book is improving. In FY2018 (financial year ended 31 March 2018), the company’s order book grew to S$313 million, a 74% year-on-year increase. The increase was due to recovery in orders at its energy-related engineering and real estate solutions divisions.
Source: Boustead Singapore FY2018 earnings presentation
Boustead Singapore’s net cash position is also strong. As of 30 September 2018, the company had S$188.4 million in net cash, translating to a net cash per share of S$0.38.
At Boustead Singapore’s current share price of S$0.80, it has a trailing price-to-earnings (PE) ratio of 11.5 and a dividend yield of 3.8%.
Challenger Technologies Limited (SGX: 573) is the next company on my list. Challenger Technologies operates the Challenger chain of information technology (IT) retail stores, and an online IT marketplace, Hachi.tech.
Just like Boustead Singapore, Challenger has not been performing well in recent history. From 2013 to 2017, Challenger’s revenue and net profit had fallen by 4.4% and 1.5% on an annualised basis, respectively.
However, things could be improving at the company.
Challenger’s revenue for the nine months ended 30 September 2018 increased by 1% while its net profit during the same period surged 35%. The company also has a healthy balance sheet to boot. As of 30 September 2018, Challenger had S$61.9 million in cash and cash equivalents with no debt.
The IT retailer will be announcing its financial results for the full year ended 31 December 2018 on 15 February 2019 after the stock market closes. It would be interesting to watch how the company has performed for the whole of 2018.
At Challenger’s current share price of S$0.525, it has a trailing PE ratio of 9 and a dividend yield of 6.3%.
The last company on my list is Valuetronics Holdings Limited (SGX: BN2), an integrated electronics manufacturing services provider with its headquarters in Hong Kong.
From FY2013 to FY2017 (the company has a 31 March year-end), Valuetronics had grown its net profit and free cash flow by 18% and 30% respectively. The strong historical performance could mean that Valuetronics possess a durable competitive advantage.
In its latest third-quarter earnings update, which was just released earlier today, Valuetronics’ net profit further increased by 2.6% year-on-year to HK$59.7 million. The improvement came on the back of higher gross profit. In fact, the latest quarter’s gross profit, gross profit margin, net profit, and net profit margin are the highest since the fourth quarter of FY2017.
Source: Valuetronics Holdings Limited FY2019 third-quarter earnings presentation
At Valuetronics’ share price of S$0.74, it has a trailing PE ratio of 9 and a dividend yield of 4.7%, which look very attractive given the growing business.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore writer Sudhan P owns shares in Boustead Singapore Limited. The Motley Fool Singapore has a recommendation on Boustead Singapore.