Best Undervalued Stocks to Buy Now in Singapore

Singapore's Stock Market: It's often referred to as one of the most stable and resilient in Asia, making it a haven for value investors. For those looking to maximize returns without taking on too much risk, finding undervalued stocks in Singapore’s market is key. But which stocks should you consider right now?

Let’s dive straight in and explore the best undervalued stocks to buy in Singapore. These picks have been chosen based on fundamental analysis, strong growth potential, and the likelihood of price corrections soon. Keep in mind, undervalued doesn’t always mean cheap—it means the company’s intrinsic value is higher than its current market price.

Keppel Corporation (SGX: BN4)

One of the largest conglomerates in Singapore, Keppel Corporation operates in industries such as offshore and marine, infrastructure, property, and asset management. With operations in more than 20 countries, Keppel offers a diversified revenue stream, making it less susceptible to any one industry downturn.

Why is Keppel undervalued?

Despite its size and diversified business model, Keppel has experienced a period of underperformance in recent years due to oil price fluctuations affecting its offshore and marine segment. However, the company has since pivoted to focus on sustainable energy and urban development, providing a strong tailwind for growth. Its low price-to-earnings (P/E) ratio compared to the industry average suggests it may be undervalued by the market.

• Key Financial Metrics:
  • Market Cap: SGD 10 billion
  • P/E Ratio: 10x
  • Dividend Yield: 4.5%

SATS Ltd (SGX: S58)

SATS is a leading provider of gateway services and food solutions to the aviation sector, making it highly correlated with the airline industry. Since the pandemic, SATS has seen a drastic decline in its stock price, but as global travel begins to recover, this stock is ripe for a rebound.

Why is SATS undervalued?

The market has not fully priced in the post-pandemic recovery of the aviation sector. As travel restrictions ease and tourism resumes globally, SATS is expected to benefit significantly from increased air traffic and demand for airline catering services. Its current stock price does not reflect this recovery potential, making it one of the top undervalued plays in the Singapore market.

• Key Financial Metrics:
  • Market Cap: SGD 5.2 billion
  • P/E Ratio: 15x
  • Dividend Yield: 3.2%

Mapletree Logistics Trust (SGX: M44U)

A real estate investment trust (REIT), Mapletree Logistics Trust focuses on logistics properties across Asia-Pacific. This sector has benefited immensely from the rise of e-commerce and the increasing demand for logistics and warehousing space.

Why is Mapletree undervalued?

Even though Mapletree has strong fundamentals, including a healthy occupancy rate and long-term lease agreements, its share price has been weighed down by broader market volatility. Investors have been cautious about REITs amid concerns over rising interest rates. However, with its focus on high-growth logistics properties and a strong dividend payout, Mapletree offers long-term value that the market seems to be underappreciating.

• Key Financial Metrics:
  • Market Cap: SGD 10.5 billion
  • P/E Ratio: 12x
  • Dividend Yield: 5.8%

ComfortDelGro Corporation Ltd (SGX: C52)

As one of the largest land transport companies in the world, ComfortDelGro operates in various countries, including the UK, Australia, and China. Its services span taxis, buses, and rail, making it a major player in the transportation industry.

Why is ComfortDelGro undervalued?

Despite a global presence and steady revenue streams, ComfortDelGro’s stock price has lagged behind its peers. This underperformance can be attributed to the negative impact of COVID-19 on public transportation. However, with the global economy reopening and a return to pre-pandemic levels of commuting, the company is poised for recovery. Its current low valuation presents a buying opportunity for long-term investors.

• Key Financial Metrics:
  • Market Cap: SGD 3.3 billion
  • P/E Ratio: 10x
  • Dividend Yield: 4.2%

City Developments Limited (SGX: C09)

City Developments is one of the leading real estate developers in Singapore. The company has a diversified portfolio of residential, commercial, and hospitality properties across the globe.

Why is City Developments undervalued?

While the real estate sector in Singapore remains strong, City Developments’ stock price has been affected by global economic uncertainty and challenges in its hotel operations due to the pandemic. However, with the gradual reopening of international borders and a recovery in the hospitality sector, the company’s fundamentals remain strong. It continues to expand its property portfolio, which could lead to significant capital appreciation in the future.

• Key Financial Metrics:
  • Market Cap: SGD 7 billion
  • P/E Ratio: 8x
  • Dividend Yield: 2.5%

What Makes a Stock Undervalued?

Before diving into more specific stocks, let’s quickly clarify what it means for a stock to be “undervalued.” Investors often look at several key metrics:

1. Price-to-Earnings (P/E) Ratio: This ratio compares the company’s current stock price to its earnings per share (EPS). A low P/E ratio relative to the market or the industry suggests the stock may be undervalued.

2. Price-to-Book (P/B) Ratio: This compares the company’s market value to its book value. A lower P/B ratio can indicate a stock is undervalued.

3. Dividend Yield: Stocks with a higher-than-average dividend yield may offer value, particularly if the dividends are sustainable.

4. Growth Prospects: Stocks may appear undervalued if the market hasn’t fully priced in the company’s future growth potential. This is often the case with companies undergoing a temporary downturn but have strong long-term fundamentals.

Why Now is the Time to Buy Undervalued Stocks in Singapore

The Singapore stock market has experienced volatility in recent years due to global macroeconomic factors such as the pandemic, rising interest rates, and geopolitical tensions. While these challenges have caused uncertainty, they have also created opportunities for savvy investors. Stocks that have been beaten down due to external factors may offer great long-term value, especially as economic conditions improve.

Moreover, Singapore’s market is known for its stability, making it an attractive destination for value investors. With a robust financial system, strong corporate governance, and a growing economy, Singapore offers a conducive environment for companies to thrive.

Additional Undervalued Stock Picks in Singapore

1. UOL Group Limited (SGX: U14): A prominent property developer with a diversified portfolio. Its low P/E ratio and strong dividend yield make it a value play in the real estate sector.

2. Frasers Logistics & Commercial Trust (SGX: BUOU): Focused on logistics and commercial properties, this REIT benefits from the e-commerce boom and offers an attractive yield.

3. Singapore Telecommunications (SGX: Z74): The largest telecom operator in Singapore. While its stock has underperformed in recent years, the company is well-positioned for a recovery, especially with its push into 5G technology.

Final Thoughts

Investing in undervalued stocks requires patience and a keen understanding of the market. Singapore offers a stable and well-regulated market that provides opportunities for investors willing to do their homework. Whether you're looking at blue-chip companies like Keppel Corporation or high-potential REITs like Mapletree, the key is to focus on companies with solid fundamentals and a catalyst for future growth.

It’s important to diversify your portfolio and stay updated on the latest market trends to ensure you’re not just buying undervalued stocks, but stocks that are poised for significant growth. Keep an eye on macroeconomic conditions, and be ready to adjust your strategy as necessary. The opportunities are out there, and with careful analysis, you can find the best undervalued stocks to buy in Singapore right now.