Top 5 stocks pick with strong growth prospects

Despite the ongoing COVID-19 pandemic as well as the discovery of new variants, Delta and Omicron, stock market in the United States continued to be in positive territory. In particular, the S&P 500 recorded a year-to-date return of 26.91%, which is much higher than its average annual return of just 8%.

Meanwhile, one of the markets which was categorised as the outlier for 2021 would be the Hong Kong stock market. The benchmark, Hang Seng Index, saw a year-to-date negative return of 15.58%. This was mainly attributed to the tech crackdown and the ongoing debt crisis happening in China’s property sector, which has a negative impact on the overall sentiment.

Back in Singapore, the benchmark, Straits Times Index, saw a year-to-date return of 8.57%. The gains were mainly led by the 3 local banks, whose share prices surge with the better local economic sentiment and news of potential interest rate hikes by the US federal reserve.

With that in mind, here are 5 stocks with the potential to continue riding on the positive momentum in 2022:

1) HRnetGroup Limited (SGX: CHZ)

HRnetGroup Limited (“HRnetGroup”) is a Singapore-based recruitment agency. The Company operates through two segments: flexible staffing and professional recruitment. It serves a spectrum of industries, including financial institutions, retail and consumer, information technology and telecommunications, manufacturing, insurance and logistics, and functions such as human resources, finance and accounting, and legal and compliance.

Key Statistics

Total Shareholder Return

With the gradual recovery in global economy and a buoyant outlook for Singapore’s job market, this resulted in HRnetGroup achieving a 52.83% total shareholder return for the past 1 year.

Majority of the return came from capital appreciation (S$0.255), while the remaining return is derived from a total dividend amount of S$0.025, which is paid as reflected in their FY2020 result.

Consensus Estimates

Based on the analyst consensus estimates, HRnetGroup has a “Buy” recommendation with a mean target price of S$1.04. This translates into a potential upside of 32.48% based on the share price of S$0.785.

2) Kimly Limited (SGX: 1DO)

Kimly Limited (“Kimly”) is one of the largest traditional coffeeshop operators in Singapore with 30 years of experience. The Group operates and manages an extensive network of 85 food outlets, 139 food stalls, 2 Tonkichi restaurants and 7 Rive Gauche Patisserie shops across the heartlands of Singapore. It also operates a Central Kitchen that supplies sauces, marinades and semi-finished food to its food stalls.

Key Statistics

Total Shareholder Return

With the 75% stake acquisition in tenderfresh and the elevated demand due to the work-from-home situation, Kimly’s total shareholder return for the past 1 year came in at 35.16%.

Majority of the return came from capital appreciation (S$0.095), while the remaining return is derived from a total dividend amount of S$0.014.

Consensus Estimates

Based on the analyst consensus estimates, Kimly has a “Buy” recommendation with a mean target price of S$0.47. This translates into a potential upside of 18.12% based on the share price of S$0.40.

Over the 6 months, analysts have uplifted Kimly’s target price by 7.35%. On top of that, they have upped Kimly’s forecasted revenue and profitability by 19.35% and 6.55% respectively largely due to the full year contribution from Tenderfresh and the continued elevated demand from the ‘work from home’ trend.

3) BRC Asia Limited (SGX: BEC)

Incorporated in 1938, BRC Asia Limited ("BRC Asia”) is a leading Pan-Asia prefabricated reinforcing steel solutions provider headquartered in Singapore. BRC Asia offers a full suite of reinforcing steel products and services that include standard length rebar, cut and bend services, prefabrication services as well as standard and customized welded wire mesh for the building and construction industry.

Key Statistics

Total Shareholder Return

With the gradual recovery in the construction sector as well as the improvement in labour shortage situation, BRC Asia achieved a total shareholder return of 16.93%.

A sizeable amount of the return came from its dividend payout to shareholder, which consists of a 4 Singapore cents special dividend in the latest result. The remaining returns came from capital gains.

Consensus Estimates

Based on the analyst consensus estimates, BRC Asia has a “Buy” recommendation with a mean target price of S$1.95. This translates into a potential upside of 28.29% based on the share price of S$1.52.

Over the 6 months, analysts have uplifted BRC Asia’s target price by 1.39%. Analysts have increased BRC Asia’s forecasted revenue and profitability by 44.45% and 24.14% respectively, underpinned by the potential surge in demand for steel products as contractors rush to fulfil the outstanding construction contracts.

4) Innotek Limited (SGX: M14)

InnoTek Limited (“Innotek”) is a precision metal components manufacturer serving the consumer electronics, office automation and automotive industries.

With five manufacturing facilities in the PRC and one facility in Rayong, Thailand, the Group’s wholly owned subsidiary, Mansfield Manufacturing Company Limited, provides precision metal stamping, commercial tool and die fabrications and sub-assembly works to a strong and diversified base of international end-customers.

Key Statistics

Total Shareholder Return

Despite the strong improvement in its latest 1H FY2021’s result, Innotek’s total shareholder return slipped into a negative territory of 17.22%. This is probably due to the cautious stance of investors given the shortage of electronic components and chips and rising operating related costs.

However, Innotek’s 1-year total shareholder return continues to be in positive territory, with a total return of 37.84%.

Consensus Estimates

Based on the analyst consensus estimates, Innotek has a “Buy” recommendation with a mean target price of S$1.20. This translates into a potential upside of 61.07% based on the share price of S$0.745.

5) Frencken Group Limited (SGX: E28)

Frencken Group Limited (“Frencken”) is a capital equipment, automotive and consumer product solution provider. It offers integrated outsourcing solutions to a diversified customer base comprising global companies. The Company operates through two segments: Mechatronics and Integrated Manufacturing Services (“IMS”).

Key Statistics

Total Shareholder Return

Despite the sharp sell down in the past 3 months, Frencken has recorded a 53.33% total shareholder return in the 1-year period. Majority of these returns are classified as capital gain (S$0.61) while the remaining was generated from the dividends being declared (S$0.03).

The strong shareholder returns can be attributed to Frencken being one of the positive beneficiaries in the semiconductor industry boom.

Consensus Estimates

Based on the analyst consensus estimates, Frencken has a “Buy” recommendation with a mean target price of S$2.57. This translates into a potential upside of 41.99% based on the share price of S$1.81.

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