4 Little Known Stocks Investors Can Consider

It’s all about the choices we make based on what options we have.

As an investor, we will always assess a possible investment based on commonly accepted financial metrics, strength of their business model, competitive moat, product/service demand, catalysts, and business prospects. This is so that we understand fully the risks and rewards of a potential stock before buying into it.

However for most investors, the choices they know of would likely be well-known and commonly mentioned names such as Tesla, Amazon, and Alibaba.

Don’t get me wrong; these companies are really great companies with solid business models and attractive prospects, but however due to their publicity, tend to have expensive stock prices reflecting the demand in their shares.

On the other hand, there are also relatively obscure companies which have yet to catch the eye of most retail investors. These stocks sometimes trade at much lower valuations, and offer good dividends with a proven profit-making business model to boot. Furthermore, with a much lower market cap, it would be relatively easier for these companies to grow their market capitalization as compared to bigger companies. Here are four of such stock counters for you to consider investing in.


Silverlake Axis (SGX:5CP)

Silverlake Axis is a enterprise tech, software, and services company focused on the asia-pacific region. Silverlake focuses on Software-as-a-service, as well as Maintenance and Enhancement services for it’s software to create value for its customers. They claim that over 40% of the top 20 largest banks in South East Asia use their core banking solutions, with over 380 customers using their software and services.

Some of the company’s highly touted software solutions include the Straight Through Banking platform and also the FERMION insurance ecosystem. The company also has subsidiaries offering software products for various other areas such as government payment solutions, core banking, insurance processing platform and analytics, inventory management, omni-channel retail, and merchandising.

Silverlake’s annual revenues and net profits have been languishing since 2017 due to the absence of large software projects. However, with Covid-19 forcing many companies and businesses to transition more towards software and IT for efficiency and to attract customers, it’s likely that Silverlake Axis will begin to see more contracts being allocated to them in the future.


Tat Seng Packaging Group (SGX:T12)

Tat Seng Packaging is a packaging manufacturer focused on producing a comprehensive portfolio of corrugated packaging products for use in the printing, medical, electronics, and F&B industry. Their local subsidiary, United Packaging Industries, is the leading supplier and manufacturer of corrugated packaging solutions in Singapore. The company operates in both Singapore and China through it’s various subsidiaries.

Corrugated packaging combines structural rigidity with cushioning qualities to protect heavy or fragile contents from damage. Furthermore, since it is 100% recyclable, it is a good option for any company that is concerned with its effect on the environment, especially as sustainability is becoming increasingly important to people in the business world.

Tat Seng has benefited greatly from the increasing demand for corrugated packaging products in Singapore and China, seeing it’s revenue, profits, and EPS rise in 2020, with momentum continuing on into 2021. The company currently trades at a relatively low PE ratio of around 4.9x, with a dividend yield of 4.3%. This includes the special dividend paid by the group to reward shareholders as well.


Valuemax Group (SGX:T61)

The Valuemax Group owns the Valuemax brand of pawnshops commonly seen in neighborhoods and shopping centers around Singapore. Apart from the 40 outlets in Singapore, the company also operates 14 outlets in Malaysia through it’s subsidiary companies.

Although they are most well-known for pawnbroking, Valuemax also engages in other business activities such as gold trading, money-lending, sale of jewelry and watches, and remittance. The company derives most of it’s revenue from Retail and trading of jewelry and gold, with income from pawnbroking and moneylending helping to supplement the business.

Although their stores look relatively nondescript, Valuemax Group has been doing well for itself for the past few years, with profit, NAV, and EPS all improving for the past five years of operation. The company currently trades at a PE ratio of 5.83x, and pays a dividend of 5.14%. The company intends to continue to grow the business by setting up more outlets to serve customers, as well as developing the moneylending segment of their business.


Q P Group (HKG:1412)

Q P Group is a relatively new company which conducted it’s IPO recently in 2020. Their main business activities involve the customization and manufacturing of puzzles, card and board games, greeting cards, and other small gifts. They provide one-stop manufacturing solutions for their customers from product development, material sourcing, end-to-end production, quality assurance and testing to logistics.

Apart from producing such products for other business entities, Q P Group also develops and maintains an online presence via a portfolio of online web-stores through which the company offers it’s services to smaller businesses and entrepreneurs. This segment has shown faster growth than their OEM business, registering almost 50% growth in revenue during 2020. This bodes well as the online sales segment also have a higher gross profit margin has compared to OEM sales.

Due to the company’s lack of publicity and unexciting business product, investors have yet to buy into the company, causing it to trade at a PE ratio of 5.25x, with a dividend yield of 10.85%. A stock with such statistics might be worth looking at for the savvy value investor.


Conclusion

Although these companies are not as well-known as other more famous entities, they can still provide an interesting growth, value, or dividend proposition for investors who are looking for places to put their money. With proven and profitable business models, alongside inexpensive valuations, investors can be said to be likely to get their money’s worth from investing in them.

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