It's from Ernest Lim --- his compilation of some SGX listed stocks which are trading at less than 7x next year's earnings.
He said: "FYI, before China Minzhong & Sino Grandness recent appreciation, they were trading at or less than 2x nx year PE.
"Nevertheless, do be aware that some stocks which are trading at low or high PE may have justifiable reasons thus this can be used as a starting point but not a stand alone investment methodology."
1. The forward PE could change in a major way with the next quarter's results, and the outlook guided by management.
2. Some stocks are mico caps, and the low PE is justified.
3. Notable big cap in the list is China Minzhong. One day, it may prove to be a bargain at this low price of 83 cents.
Eratat Lifestyle 1.4
Yamada Green 1.7
Kinergy Ltd 1.7
Sinopipe Hlds 1.7
Sunvic Chemical 1.7
Hu An Cable 1.8
Foreland Fabrict 1.9
Combine Will Int 2.1
Sino Grandness 2.3
Ue E&C Ltd 2.3
Ziwo Holdings 2.4
Wee Hur Hldgs 2.5
DMG co-head of research Terence Wong has key points:
1. The inflection point for the STI in the past three crises coincided with the worst quarter in terms of GDP change year-on-year. The current quarter is likely to be the worst for the Singapore economy this year. “If history is anything to go by, the Singapore market may turn around as soon as the first quarter of 2012,” says Wong.
2. For small caps, DMG’s top stock picks are in the technology and construction sectors. “HDD major Western Digital, which was the most severely affected by the floods in Thailand, is recovering much
faster than expected. The component suppliers will thus start ramping up their production in the current quarter,” says Wong. “That is the inflection point I have been looking out for, and should result in interest returning to the tech sector.”
3. DMG’s tech favourites include Hi-P International, Nera Telecommunications, Trek 2000 International and Adampak.
Stocks in the construction industry it likes are BBR Holdings, Kian Ann Engineering, KSH Holdings, Lian Beng Group and OKP Holdings. “Given the strong pipeline of contracts, especially from the government sector, the construction players will not go hungry even if we head into a recession,” Wong says.
A lot of these stocks will do well if there is a sustained recovery in the outlook of the economy. These are penny stocks that will be played up by syndicates and retail players when the Time is Right! In the meantime, mainly value investors will look to accumulate quietly and wait patiently for the Time is Right.
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