4 Refreshing Stock Picks You Should Consider
After a splendid run-up in the past 4 months, stocks are looking a tad expensive. A correction seems overdue, as markets began to feel jittery about renewed trade tensions. For investors who are out on a hunt for bargain stocks to rebalance your portfolio, here are four stocks that you should consider.
Investors Takeaway: 4 Refreshing Stock Picks You Should Consider By UOBKH
- ST Engineering
ST Engineering has been on an acquisition spree of companies that are earnings accretive. Its latest acquisition, Newtec, is a satellite communication company in the broadcast & consumer space. According to UOBKH, Newtec’s satellite communication technology is a critical infrastructure in providing real-time content. Industry sources have estimated that demand for satellite communication is expected to grow by 10-15 percent CAGR over the next 10 years.
ST Engineering also managed to secure $2.1 billion worth of orders in the last quarter, the highest since the first quarter of 2010. $1.3 billion of orders came from the aerospace segment with the rest contributed by the electronics segment. UOBKH notes that the order wins will add to its already-strong outstanding orderbook, which offers two years of revenue visibility.
BUY, TP $4.40; Current share price $3.93
- Singapore Press Holdings
For years, Singapore Press Holdings (SPH) has been struggling with declining viewership for its core printing business. Recently, SPH has been doing a good job in building a counter-cyclical business to pick up the slack. SPH acquired its first student accommodation portfolio of 14 assets to mark its first foray into the scalable defensive business where yield for student accommodation is approximately 6.5 percent.
Besides addressing its business strategy, the new management team is also actively improving capital efficiency through capital recycling exercises. SPH disposed of its treasury and investment portfolio of $189 million that generated only four percent yield in FY18. SPH then used the proceeds to acquire accommodation assets with an attractive 6.3 percent net yield.
BUY, TP $2.82; Current share price $2.40
- Koufu Group
Koufu has been touted by UOBKH as a defensive cash cow backed by strong brands and its market leading position. Koufu is highly focused on providing competitively priced meals transacted in cash terms. In addition, Koufu has a consistently high occupancy in the last three years. This gives Koufu the ability to generate strong cash flow and sustain its intention to distribute at least 50 percent of its profits as dividend.
With the completed enhancement initiatives of Rasapura Masters and a faster rollout of R&B and Super Tea, UOBKH believes that Koufu’s net profit growth could come in double digits. Beyond Singapore, Macau will be its overseas expansion springboard which is already contributing nine percent of the group revenue.
BUY, TP $0.95; Current share price $0.73
- CapitaLand Commercial Trust
According to UOBKH, grade-A core CBD office rents has increased 14.9 percent to $10.80 per square feet (psf) since 2018. With limited upcoming supply of office space within the core CBD, UOBKH expects CapitaLand Commercial Trust to achieve positive rental reversion for Asia Square Tower 2 in 1H19 and CapitaGreen in 2H19. Over the longer term, CBD Incentive Scheme under Master Plan 2019 will further moderate the supply of office space within the CBD as office spaces are converted for residential and hotel usage.
On the acquisition front, CapitaLand Commercial Trust is planning to continue adding scale and depth to its presence in Germany. It completed the acquisition of 38-storey grade-A freehold commercial building Gallileo in Frankfurt’s banking district for $540.7 million in June 2018. UOBKH notes that there are opportunities to expand to other gateway cities in Germany, such as Berlin, Munich, Hamburg and Dusseldorf.
BUY, TP $2.16; Current share price $1.89