It is a common perception that Singapore has no growth stocks given its small market size of just 5.5M people.
That is true to a certain extent as we often see the biggest names and the fastest growing stocks coming from the US and China.
But if we dug deep enough, we can find growth stocks in every country, even in Singapore. I wanted to showcase five, which you might have missed.
But this is where the secret is – while you can get growth from big well-known names in the US and China, you typically have to look under the hood for growth stocks in smaller markets.
The blue chips face saturation in a small market – they have taken the market and have less room to grow. The growing ones are typically the smaller caps with a good positioning or competitive advantage in a niche area.
(The results are historical and please assess its future growth potential before diving in as the growth runway can be shorter for smaller markets. You don’t want to invest near the tail end of its growth.)
EPS +29%, Share Price +83%
Nanofilm listed in 2020 and was already a popular stock. I covered Nanofilm’s IPO previously and opined that the IPO offer price was expensive. But what is expensive can get even more expensive.
The share price had jumped up more than 83% in less than a year!
Dr Xu Shi is the founder of Nanofilm and an NTU professor-turned-entrepreneur successful story. His wife celebrated the success by buying a good class bungalow. I bet their journey hasn’t been easy and Nanofilm definitely isn’t an overnight success – Dr Xu started the business in 1999 with $225,000 and now he is worth $1.5 billion.
It is in a good business of coating (advanced materials), and counts one of the largest electronics brand as its customer (undisclosed). Nanofilm’s coating can be applied beyond electronics and has unlimited use cases since almost everything needs a coat.
The historical Earnings Per Share (EPS) compounded annual growth rate (CAGR) has been fantastic at 29% per year for the past 4 years.
I think the growth should be able to sustain as I believe the coating applications will increase and Nanofilm will eventually move into more industries.
EPS +48%, Share price +220%
I guess Singaporeans might be more familiar with The Hour Glass when it comes to luxury watches. Cortina is a competitor, and both have seen their share prices soared over the years. However, Cortina has clocked a higher EPS growth (48% CAGR) in the past 5 years.
Cortina’s main revenue comes from Singapore and subsequently, Southeast Asia (Malaysia, Thailand and Indonesia). They are an official retailer of Patek Philippe and Rolex.
The recent acquisition of Sincere Watch would help Cortina gain an exclusive distribution rights of the Franck Muller brand in 13 countries and expand the number of retail stores in Asia.
Cortina’s share price has shot up by 220% over the past 5 years! That translates to an average annual return of 34%.
I believe that luxury play is going to do well because Singapore attract the wealthy to migrate or at least stay here. It is quite often we see top end properties being sold to foreigners. Besides real estate, watches are a favourite amongst the rich.
EPS +48%, Share Price +245%
The third stock in this list is probably not something that many would expect – the good ol’ Liquified Petroleum Gas (LPG). In our technological driven world, who wants to invest in commoditised LPG business?
Before you judge, take a look at their EPS CAGR of 48% n the past 4 years!
And its stock performance has been superb, gaining 245% in slightly less than 4 years.
You have probably seen Union Gas logo in many coffee shops in Singapore – on signboards, tables, LPG cylinders etc.
Union Gas has three business segments – retail, commercial and Natural Gas / Diesel. They made most of their revenue by delivering LPG gas cylinders to homes for cooking purposes. The second largest contribution comes from coffee shops and restaurant customers. Lastly, they also provide LNG and diesel to vehicles.
The founder, Teo Kiang Ang, is also the founder of Trans-cab. He is one hella entrepreneur.
EPS +39%, Share Price +673%
iFAST is probably the hottest stock in Singapore right now. We first wrote about it when the stock was trading at $0.93 but back then, we said the fair price would be between $2 to $2.50. Little did we expect the share price to go as high as $8.35!
Of course, big fundamental changes have happened since the article – iFAST had a bumper year due to Covid and they won the contract to serve as an investment platform for the Hong Kong pension.
iFAST’s EPS CAGR was 39% for the past 5 years, you can see the big jump in EPS in 2020.
iFAST should still enjoy good growth going into the future but I believe the expectations are high too.
Firstly, 2020 was an exceptional year for many investment firms which may not be repeatable. Secondly, the investment platform in Hong Kong would take time to ramp up and produce significant revenue to iFAST.
The results may not be immediate. Nonetheless, their future is a bright one.
EPS +49%, Share Price +4,413%
AEM provides semiconductor and electronics testing services. Thanks to the Singapore government’s push to create the semiconductor sector in Singapore, we now have some successful homegrown companies like AEM.
Although we do not compete with the top chip designers or the fabricators, our local companies have prospered by offering downstream activities such as testing.
AEM grew its EPS at 49% CAGR in the past 5 years.
Its share price is even more fantastic, rising 4,413% in the last 5 years or 44x or 159% per year!
AEM has Intel to thank as a major customer.
But Intel isn’t in the greatest position to make the best chips any more. It lost on chip design to Apple and fabrication technique to TSMC. There’s a lot of catch up to do to regain the pole position.
But AEM doesn’t need Intel to be number 1 in the industry, AEM just needs Intel to keep spending and Intel’s latest $20 billion expansion plan might be music to their ears.
Singapore is a small market but that doesn’t mean there are no growth stocks here. That said, they are rare and you will need to dig beyond the familiar names to find them.
But they can be very rewarding if you can buy them early and hold long enough to see the growth come into fruition.
There’s an advantage being a local in this case as you would be more cognisant about their business developments and even possibly be a customer yourself.
The hunt for such stocks is part of the fun!