A combination of surging inflation and high interest rates has dampened demand for many stocks.
Investors are fearful that higher prices will lead to reduced consumer demand, resulting in a lower appetite for goods and services.
In light of these worries, some stocks have seen their share prices decline to a 52-week low.
However, savvy investors will recognise that some of these challenges are short-term in nature.
Once the economic cycle turns, businesses that possess strong franchises and are prudently managed should enjoy their time in the sun.
Meanwhile, it can be useful to trawl through the 52-week low bargain bin to sift out potential investment ideas.
Here are four stocks that recently touched a year-low and could be interesting candidates for your buy watchlist.
Singtel (SGX: Z74)
Singtel needs no introduction, being Singapore’s largest telecommunication company (telco) that offers mobile, broadband, and Pay TV services.
The blue-chip telco saw its share price touch a 52-week low of S$2.35 and is also down around 16.3% currently from its year-high.
Singtel released a mixed set of earnings for its recent fiscal 2023’s third quarter (3Q FY2023).
Underlying operating profit slipped by 9.2% year on year but underlying net profit was boosted by increased contributions from its regional associates.
Investors are probably worried about a potential recession that may dampen demand for the group’s roaming services, broadband, and Pay TV.
The good news is that the telco has promised to pay out the next tranche of its special dividend of S$0.025 when it reports its full-year results in May.
The telco may also see some respite from a recovery in air travel demand that could boost roaming revenue in the near term.
Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
Micro-Mechanics (Holdings), or MMH, designs and manufactures high-precision tools and parts used in the wafer fabrication cum assembly processes for the semiconductor industry.
MMH’s share price has steadily declined to a low of S$2.10, down nearly 34% in the past year.
The group had reported a downbeat set of earnings for its fiscal 2023’s first half (1H FY2023).
Revenue dipped by 9.6% year on year to S$36.9 million while operating profit fell by 34% year on year to S$8.4 million.
Net profit plunged by 35.5% year on year to S$6.1 million.
However, free cash flow remained healthy and edged up 4.1% year on year to S$9.8 million for 1H FY2023.
Management has also maintained its interim dividend of S$0.06 per share despite the weaker earnings.
Looking ahead, the World Semiconductor Trade Statistics has forecast that the worldwide semiconductor market will dip by 4.1% year on year to US$557 billion this year.
These numbers will have a dampening effect on demand for MMH’s products and services but the industry is known for being cyclical.
Japfa Ltd (SGX: UD2)
Japfa is a vertically integrated agri-food business that serves protein staples such as poultry and swine to countries such as Indonesia, Vietnam, and India.
Japfa’s share price has shrivelled by 62.7% year to date and touched a recent 52-week low of S$0.22.
Although revenue for the agricultural group rose 6.6% year on year to US$4.4 billion, operating profit declined by nearly 29% year on year to US$155.5 million.
Net profit plunged by 93.1% year on year to just US$8.2 million as selling prices could not keep pace with higher production costs.
Free cash flow also turned negative for 2022 compared to a positive free cash flow of US$69.8 million in 2021.
The group declared a final dividend of S$0.01, unchanged from a year ago.
Japfa is confident that it can ride through the current down-cycle as it is one of the lowest-cost and most efficient producers of animal feed.
Thomson Medical Group (SGX: A50)
Thomson Medical Group, or TMG, is one of the largest private providers of healthcare services for women and children in Singapore.
The group owns and operates Thomson Medical Centre and a network of specialist clinics and facilities catering to women and children.
Shares of the healthcare provider have touched a 52-week low of S$0.063 recently.
TMG reported a strong set of earnings for 1H FY2023, with revenue jumping 26.6% year on year to S$184 million.
Net profit surged by 82.6% year on year to S$22.8 million.
The group also recently communicated its intention to grow its Pan-Asian footprint and is evaluating proposals for acquisitions or collaborations for healthcare businesses in the region.
If you’re looking to invest in 2023, our latest FREE report can guide you. It shows you how to find dividend stocks in SGX, and a nearly fool-proof way of building your portfolio. Many people love dividend investing, but few truly know how to profit from it consistently. Click the link here to download our new report and discover the secrets!
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Royston Yang owns shares of Micro-Mechanics.
