Here Are 3 Stocks That Are Trading Near 52-Week Lows
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. In here, let’s look at three such stocks: Singapore Post Limited (SGX: S08), SIIC Environment Holdings Ltd (SGX: BHK), and Challenger Technologies Limited (SGX: 573).
Source: SGX Stock Facts; Yahoo Finance
Singapore Post provides postal and logistics services. The company’s latest results, announced in early February, is for the third quarter of its fiscal year ending 31 March 2017.
The company is having a challenging year thus far. Despite a 16.8% increase in revenue for the quarter due to acquisitions in the company’s eCommerce business, net profit attributable to shareholders decreased by 27.9%, while underlying net profit (which strips away one-off items) was down 28.5%.
The bottom-line decline was due to operating losses in the company’s US-based eCommerce business, costs related to the new Regional eCommerce Logistics Hub, and a fall in domestic mail volumes.
The lower profit indicates that company’s change in strategy to focus on logistics and e-commerce remains a work in progress. The company is working hard to ensure its shift into e-commerce is successful. For example, Singapore Post is currently testing the use of electric scooters to improve delivery; in late 2015, it also conducted an experiment with using drones to deliver packages.
But, the main task ahead for Singapore Post is to integrate its recent acquisitions into its fold to ensure that any planned synergies can be achieved.
Next up, we have SIIC Environment Holdings, which is involved with water treatment, solid waste treatment, and other environment-related businesses. The company has three business segments: Construction; Water and Sludge Treatment and Water Supply; and Waste Incineration.
Over the last 12 months, SIIC Environment Holdings’ share price has been on a downward spiral, losing 27%. This has happened even as the company managed to grow its business in 2016. For the year, SIIC Environment Holdings’ revenue and profit attributable to shareholders jumped by 46.8% and 26.2%, respectively.
The last company on my list today is Challenger Technologies. An IT products retailer, Challenger Technologies released its results for the fourth quarter of 2016 in late February.
Softer consumer demand had led to lower revenue during the quarter (a 13% drop) and for the whole of 2016 (a 4% drop). But, online sales from the company’s online marketplace, Hachi.tech, which was launched in April 2016, helped to offset some of the decline. Despite experiencing a decline in revenue for the year, Challenger Technologies remained free cash flow positive and still maintains a strong balance sheet that is in a net-cash position.
In 2017, the company will “rationalise under-performing retail stores,” enhance its online shopping experience, and open a new flagship store in May.
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 Singapore Post, SIIC Environment Holdings, and Challenger Technologies 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.