By Say Cheong //
August 21, 2020

Financial publications and Web sites, such as Yahoo! Finance, publish a list of stocks every day that hit their 52-week high prices and another list of those that sink to a 52-week low.

Given the choice, would you be better off buying a stock from the 52-week high list or the 52-week low list?

The Theory Behind 52-Week High and/or Low

Yes, as you would guessed it, history has shown that many growth companies often have to surpass their 52-week highs multiple times in order to reach where they are today.

Think about the recent multi-bagger stocks like Facebook, Apple, AEM Holdings, Riverstone and more…

In contrary, companies with bad fundamentals like Noble Group and Singapore Press Holdings (SPH) can reach 52-low and keep drowning to even multi-year low or even go bankrupt.

As such, stocks trading near their 52 weeks high may actually serve as a good technical indicator for winning stocks with great fundamentals and they can often ride to greater heights.

With that, here are 3 small cap stocks listed on SGX that are trading at their 52 weeks high.

#1 Starburst Holding Limited 

Starburst is an engineering group that specializes in the design and engineering of firearms-training
facilities. It is headquartered in Singapore, and its customers span across law enforcement, military, security agency, and civil authorities. It has presence in Singapore, Malaysia and the Middle-east.

As of the latest annual report, Starburst’s revenue increased by 29.3% to $9.2 million. Its net loss narrowed to negative $2.4 million from $4.4 million. Free cash flow came in at a negative 1.4 million.

The negative cash flow is due to the increase of trade receivables. It could be that Starburst acquired more clients or provided more services to its existing clients through giving them certain credits. Cash balance of the company was at a healthy level $5 million.

In recent geopolitical tension between several world superpowers, global defence spending is expected to increase. Starburst which is one of the strong players in this niche industry and is poised to leverage on the increased in spending to grow itself. Investors who comprehend this have piled into Starburst for its future growth.

Starburst last closed at $0.42 which is near its 52 weeks high and historic high of $0.44. It currently offers a dividend yield of 5.9% and has no P/E ratio due to its losses.

#2 GKE Corporation Limited

GKE Corporation Limited is an integrated warehousing and logistics solutions provider of solutions for supply chain management. The business activities of GKE can be classified into two broad categories: (i) warehousing & logistics, and (ii) strategic investments. It has presence in both China and Singapore.

As of the latest annual report, GKE’s revenue increased commendably by 21.6% to $107.3 million. Its net profit turned positive to $4.8 million. Free cash flow was at a high of $20.4 million. As a result, cash balance of the company doubled to a solid level of $20.7 million.

Its business has recently turned a corner and investors are scouring for more information about it again. Logistics is one of the shining industries that has showed its resilience and necessity throughout this pandemic.

With E-commerce becoming even more commonplace as buyers are staying at home, logistics as a downstream industry is set to benefit greatly. Investors are catching on this point and have looked towards GKE for signs of growth prospects.

GKE last closed at $0.084 at its 52-week high, which values it at a P/E of 47.1. The company did not announce any dividend for the year 2019.

#3 Frencken Group Limited

Frencken provides comprehensive Original Design, Original Equipment and Diversified Integrated Manufacturing solutions for companies in the automotive, healthcare, industrial, analytical & life sciences and semiconductor industries.

Frencken operations stretch from product conceptualisation, integrated design, prototyping and new product introductions, to supply chain design and management, state-of-the-art value and volume manufacturing and logistics services. It has presence across Asia, Europe and the USA.

As of the latest annual report, Frencken’s revenue increased by 5.3% to $659.2 million. Net profit increased substantially by 41.1% to $ 42.3 million. Free cash flow improved drastically from 2018’s $0.8 million to $79.6 million. As a result, cash balance jumped to $122.4 million

The semi-conductor industry has taken advantage of the strong demand for mobile phones, wearables such as smart watches, etc. The trend is expected to continue and semi-conductors’ manufacturers such as Frencken are expected to benefit from this.

Frencken last closed at $1.17, around its 52 weeks high. This values the firm at a P/E ratio of 11.83 and dividend yield of 2.54%.

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