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 three of them:
The first on the list is Sarine Technologies Ltd (SGX: U77).
Sarine Technologies is an Israel-based company engaged in developing, manufacturing, marketing and selling precision technology products for processing of diamonds and gemstones.
Recently, Sarine issued a profitability guidance, estimating that its third-quarter revenue would just exceed US$11 million and that it would record a minimal operating loss of several hundred thousand dollars. Comparatively, last year’s third quarter revenue and net profit were US$17.3 million and US$4 million respectively.
The company stated that the buildup of surplus inventories of polished diamonds in the mid-stream, ongoing illicit operations infringing on its intellectual properties and uncertainties stemming from litigations pertaining to these issues impacted equipment sales in the third quarter.
At the current price of $0.925, Sarine Technologies is trading at a price to earnings ratio (P/E) of 16.3 times.
The next company on the list is Yeo Hiap Seng Ltd (SGX: Y03).
The company operates through two divisions, namely Food and Beverage, and Property. Example of brands distributed by the company includes Yeo’s, H-TWO-O, Pink Dolphin and Justea.
In its last quarterly result announcement, it stated that revenue was down by 23% year-on-year to S$87.2 million. Similarly, profit attributable to shareholders was down by 35% year-on-year to S$5.3 million. The weaker financial performance was due to the transition to new distributors in Cambodia, competitive pricing and general market weakness.
The challenging operating environment is expected to continue due to soft economic conditions, weak outlook for its key markets, competitive selling prices, and uncertainty in raw material prices.
At the current price of $1.27, Yeo Hiap Seng is trading at a P/E ratio of 4.61 times.
The last company on the list today is Indofood Agri Resources Ltd (SGX: 5JS).
Indofood Agri is a vertically integrated agribusiness with principal activities that span the entire palm oil supply chain. The group also engages in the cultivation of rubber, sugar cane and other crops. Though Indofood Agri is widely diversified, plantations segment is by far the biggest profit contributor to the group.
Indofood Agri’s share price has been declining for the last five years. Cumulatively, the decline wrote off about 65% of its market capitalisation during the period.
At the current price of $0.45, Indofood Agri is trading at a P/E ratio of 9.6 times.
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 about the companies above 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.
$Indofood Agri(5JS.SI) $Wilmar Intl(F34.SI) $Sarine Tech(U77.SI) $Yeo Hiap Seng(Y03.SI)
These 3 Companies Are Trading Close To Their 52-Week Low Prices
These three companies trading close to their 52-week low prices might be a source of ideas.