Investors tap on different strategies to get valid investment ideas.
A common method is to look for stocks that are touching a 52-week high as the flurry to buy may signal strong business momentum.
Growth stocks fit into this category as investors project further business expansion and bid their share prices ever higher.
Such a strategy could be risky should the company fail to deliver on its lofty growth expectations.
But if you’re looking for value stocks, you may wish to search through the bargain bin.
Stocks that are scrapping their 52-week lows are a good source of investment ideas that you can tap on.
However, it’s important to differentiate between a temporarily beaten-down stock versus a value trap.
Here are four stocks that are touching a year-low that possibly could end up on your buy watchlist.
Cromwell European REIT (SGX: CWBU)
Cromwell European REIT, or CEREIT, owns a portfolio of over 110 predominantly freehold properties in 10 countries across Europe.
Its properties take up approximately 1.9 million square metres and are valued at around €2.6 billion as of 30 September 2022.
Units of CEREIT recently hit €1.50, close to their one-year low of €1.46, and have declined almost 41% in the past year.
The REIT, however, still maintained a high occupancy rate of 95.7% as of 30 September, with a weighted average lease expiry (WALE) of 4.6 years.
For the first nine months of 2022 (9M2022), CEREIT reported a 9.1% year on year increase in gross rental revenue to €163.4 million.
Net property income (NPI) increased by 4.5% year on year to €101.8 million while distributable income inched up 3.8% year on year.
The European REIT also reported a positive rent reversion of 4.5% for 9M2022.
CEREIT had net gearing at 37.6% with a low all-in cost of debt at 2.28% and slightly more than three-quarters of its debt on fixed rates.
Investors also need not worry about surging inflation as CEREIT has incorporated rental escalation clauses into its leases in all 10 countries.
Prime US REIT (SGX: OXMU)
Prime US REIT is a US commercial REIT that owns 14 freehold office properties valued at US$1.67 billion as of 30 September 2022.
The portfolio enjoyed a high occupancy of 89.6% and a WALE of 4.1 years.
The REIT’s unit price hit a 52-week low of US$0.38 and is down 54.2% in the past year.
Prime US REIT reported a respectable financial performance for 9M2022, with gross revenue rising 9.8% year on year to US$122.4 million and NPI increasing 4% year on year to US$75 million.
As a result, distributable income climbed 9.2% year on year to US$60.5 million.
The commercial REIT’s aggregate leverage stood at 38.7% with an all-in weighted average interest rate of 3.2%.
83% of its loans are on fixed rates or hedged.
Furthermore, the REIT manager believes that there could be a potential positive rental reversion of 6.7% for the portfolio.
Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
Micro-Mechanics (Holdings) Ltd, or MMH, manufactures and markets high-precision tools and parts used in the assembly processes for the semiconductor industry.
MMH’s share price has skidded nearly 24% to S$2.56, slightly above its 52-week low of S$2.51.
The manufacturer’s fiscal 2023’s first quarter (1Q2023) showed signs of weakness, with revenue dipping by 1.3% year on year to S$20.2 million.
Net profit for 1Q2023 fell by 14.6% year on year to S$4.2 million.
The semiconductor sector is seeing waning demand as rising interest rates and higher cost of living have crimped demand for smartphones and other devices, thereby reducing demand for microchips and semiconductors.
Just last week, Samsung Electronics (KRX: 005930) reported that its net profit plunged to an eight-year low as the global economy remained weak.
In addition, the World Semiconductor Trade Statistics has also projected a 4.1% year on year decline in the worldwide semiconductor market this year.
Q&M Dental Group (SGX: QC7)
Q&M Dental owns the largest network of private dental clinics in Singapore, with 106 outlets across the island.
In addition, the group also has 45 dental clinics in Malaysia, a dental clinic in China, and a dental supplies and equipment distribution business in Malaysia.
The dental group’s shares recently hit S$0.33, down 46.8% in a year and are just a whisker above their 52-week low of S$0.30.
For 9M2022, the group reported a 12% year on year decline in revenue that was mainly because of a fall in revenue from COVID-19 diagnostic tests.
Net profit plunged by 51% year on year to S$13.4 million over the same period.
Despite the weaker results, management has disclosed that Q&M Dental’s core healthcare business remains resilient.
For 9M2022, revenue inched up 3% year on year for this division while net profit dipped by just 4% year on year.
Elsewhere, the group plans to push on with its expansion plan by opening new dental clinics in Southeast Asia.
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Disclaimer: Royston Yang owns shares of Micro-Mechanics (Holdings) Ltd.