An attractive stock is one with strong fundamentals sweetened by undemanding valuation that are compelling enough for investors. Here are two stocks touted to be worth accumulating at their current share price.
SATS is a long-term play for investors who are interested in investing in the aviation industry. As Changi Airport continues to see higher passenger throughput rates, SATS is one of the major beneficiaries as it handles about 80 percent of the traffic throughput in the airport.
Further, with the opening of the fourth terminal (T4), Changi is expected to see higher traffic which means higher profitability for SATS which is handling operations at the new terminal through a joint venture with AirAsia.
In the long run, SATS has chosen to diversify into different industry such as partnering with Wilmar in its aim to “supply quality and safe food in China”, utilising the company’s expertise in operating a central kitchen, while tapping on Wilmar’s well-established distribution network in China. The diversification from the aviation industry can help to build its resilience against industry-specific disturbances.
At its current trading price of $5, OCBC Investment opines that it is an attractive entry point as the firm is expanding its foothold in Asia and building resilience through diversification. The stock has a Buy call from OCBC with a target price of $5.50, indicating a potential upside of 10 percent.
First Resources attractiveness lies in its cost efficiency as well as having a positive medium-term growth prospect. It is one of the lowest cost producer which helps it to keep up a healthy margin to ensure profitability.
Despite the fall in crude palm oil prices caused by the US-China trade war, China is expected to import soybeans from Brazil and Argentina at a higher price to meet its current demand. As soy prices rise, demand for palm oil could recover as soybeans and palm oil are considered to be close substitutes.
Analysts at Maybank Kim Eng opine that due to the low-cost production of First Resources, recovery in CPO prices will benefit the stock and hence investors may make use of the current weakness in share price to accumulate the stock.
Overall, Maybank Kim Eng ascribed a target price of $2.00 for First Resources, which translate to an upside of 29 percent from the current share price of $1.55.