These 2 Companies Are Trading Close To Their 52-Week Low
As an investor, one of the methods that I use to search for investment ideas is stock screening.
One of my personal favourite screens is the 52-week low list. This screen, which is usually performed weekly, will give me a list of companies that are trading at their 12-month low.
Why do I like this screen? As a value investor, I like to search for companies that are trading at good value. The 52-week low could be a good place to start, since these companies might have been ignore by the investment community for various reasons. Some deserve to be.
Occasionally, however, the market might have been overly negative. These companies could have good long-term prospects, despite some short-term headwinds. My job, then, is to try to separate the wheat from the chaff.
So what are the companies that have shown up on this week’s list? Here are two of them:
Rotary Engineering is an oil and gas infrastructure services companies. It offers fully integrated engineering design, procurement, and construction (EPC) services to the oil and gas, petroleum, petrochemical and pharmaceutical industries.
The group’s key market is Singapore, though it also operates in some overseas market like Malaysia, Thailand, Indonesia, India and China. In operates mainly under two segments, namely Project Service and Maintenance and Trading.
In its latest quarterly result announcement, Rotary announced a decline in revenue of 8% year-on-year due to completion of its major projects. Yet, profit after tax jumped from $0.7 million to $3.8 million due to productivity gains from major project closures and contingency provision written back.
One positive about the company is that it cash and cash equivalents stands at $66.2 million with a debt to equity ratio of 0.12. This points to a strong balance sheet.
Moving on, Hotel Grand Central owns, operates and manages hotels. It operates in five regions, namely Singapore, Malaysia, Australia, New Zealand and China.
The biggest revenue contributor to the group is properties in Australia, followed by Singapore and New Zealand. In Singapore, it has two hotels – Hotel Grand Central and Hotel Chancellor@Orchard.
In term of financials, one thing that is interesting about the company is its healthy balance sheet. From its latest quarterly result announcement, Hotel Grand Central had about $344 million in cash whilst borrowings stood at “only” $131 million.
At current share price of $1.34, the company is trading at a P/E ratio of 15.6 times.
Though companies trading at 52-week low are a good place to search for investment ideas, the low price itself should not be the sole reason to invest in these companies.
As we all know, there is no guarantee that share prices will not fall further, just because it is trading at a 52-week low.