Yahoo Finance 4 Stocks Trading Near 52-Week High That Can Scale Higher
Investors generally consider a 52-week high as a good criterion to determine an entry or exit point for a given stock. However, stocks touching new 52-week highs are often predisposed to profit-taking, resulting in pullbacks and trend reversals.
Moreover, given the high price, investors often wonder if the stock is overpriced. While the speculations are not absolutely baseless, all stocks hitting a 52-week high are not necessarily overpriced.
In fact, investors might lose out on top gainers in an attempt to avoid the steep prices.
Stocks such as Ameriprise Financial AMP, AAR Corp. AIR, MRC Global MRC and Jabil JBL are expected to maintain the momentum and keep scaling new highs. More information on a stock is necessary to understand whether or not there is scope for further upside.
Here we discuss a strategy to find the right stocks. The technique borrows from the basics of momentum investing and bets on “buy high, sell higher.”
52-Week High: A Good Indicator
Many a time, stocks hitting a 52-week high fail to scale higher despite having potential. This is because investors fear that the stocks are overvalued and expect the price to crash.
Overvaluation is natural for most of these stocks as investors’ focus (or willingness to pay the premium) has helped them reach the level. But that does not always indicate an impending decline. Factors such as robust sales, surging profit levels, earnings growth prospects, and strategic acquisitions that encouraged investors to bet on these stocks could keep them motivated if there is no tangible negative. In other words, the momentum might continue.
Also, when a string of positive developments dominates the market, investors find their under-reaction unwarranted, even if there are no company-specific driving forces.
Setting the Right Filters
We ran a screen to zero in on 52-week high stocks (trading near the high level) that hold tremendous upside potential. The screen includes parameters to shortlist stocks with strong earnings growth expectations, sturdy value metrics and price momentum.
Moreover, the screen filters stocks that are relatively undervalued compared to their peers in terms of earnings as well as sales, ensuring the continuation of their rally for some time.
Current Price/52 Week High >= .80
This is the ratio between the current price and the highest price at which the stock has traded in the past 52 weeks. A value greater than 0.8 implies that the stock is trading within 20% of its 52-week high range.
% Change Price – 4 Weeks > 0
It ensures that the stock price has moved north over the past four weeks.
% Change Price – 12 Weeks > 0
This metric guarantees a continued upward price momentum for the stock over the past three months as well.
Price/Sales <= XIndMed
The lower, the better.
P/E using F(1) Estimate <= XIndMed
This metric measures the amount an investor puts into a company to obtain one dollar of earnings. It narrows down the list of stocks to those that are undervalued compared to the industry.
One-Year EPS Growth F(1)/F(0) >= XIndMed
This helps choose stocks that have higher growth rates than the industry. This is a meaningful indicator, as decent earnings growth adds to investor optimism.
Zacks Rank =1 or 2
No screening is complete without the Zacks Rank, which has proved its worth since its inception. It is a fundamental truth that stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) have always managed to brave adversities and beat the market average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price >= 5
This parameter will help screen stocks that are trading at $5 or higher.
Volume – 20 days (shares) >= 100000
The inclusion of this metric ensures that there is a substantial volume of shares, so trading is easier.
Here are our four picks of the 25 stocks that made it through the screen:
Ameriprise Financial is a diversified financial services company that offers a wide range of products and services focused on financial planning and advice. The company helps its individual and institutional clients achieve their financial objectives.
The company remains well-positioned for impressive top-line growth on the back of its robust assets under management (AUM) balance and business restructuring initiatives. It constantly modifies its product and service-offering capacity to keep pace with dynamic market needs. This strategy, along with asset growth, has helped the company witness a rise in total net revenues.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for AMP’s 2023 earnings has increased 4.5% to $30.69 per share in the past 30 days, indicating growth of 22.08% year over year. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 5.5%.
AAR Corp. provides various products and services to the aviation and defense industries worldwide. The company continues to witness strong performance in its parts supply and program activities. Recovery of demand in the commercial and leisure travel market should continue to contribute to its operating results. The latest agreement with Collins Aerospace may allow it to gain from growth opportunities in the jet market. The stock holds a strong solvency position in the near term.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for AIR’s fiscal 2023 earnings has remained steady at $3.03 per share in the past 30 days, indicating growth of 27.3% year over year. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 3.17%.
MRC Global is one of the leading distributors of pipes, valves and fittings, and related products and services. The company is poised to benefit from strength in its gas utilities sector due to long-term market drivers like distribution integrity upgrade programs and new home construction. The DIET sector is likely to gain from new energy transition-related projects, project turnaround activity along with maintenance, repair and operations activities. The company’s focus on expanding market share, enhancing profitability and boosting working capital efficiency is encouraging.
The company currently carries a Zacks Rank 2. The Zacks Consensus Estimate for MRC Global’s 2023 earnings has remained steady at $1.15 per share in the past 30 days, indicating growth of 325.9% year over year. The company surpassed the Zacks Consensus Estimate twice in the trailing four quarters while matching the same on one occasion and missing the same on the other, the average surprise being 102.98%.
Jabil is one of the largest global suppliers of electronic manufacturing services. The company is benefiting from strong demand in key end markets with excellent operational execution and skillful management of supply chain dynamics. It is likely to witness healthy top-line growth owing to secular tailwinds in healthcare, automotive, industrial, 5G and cloud businesses. Jabil’s focus on end-market and product diversification is a key catalyst. Its Photonics business unit and EFFECT Photonics have joined forces to develop next-generation coherent optical modules, which will likely drive top-line expansion.
The company currently has a Zacks Rank of 2. The Zacks Consensus Estimate for JBL’s fiscal 2023 earnings has remained steady at $8.37 per share in the past 30 days, indicating growth of 9.41% year over year. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 8.78%.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks' portfolios and strategies are available at: https://www.zacks.com/performance/.
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Ameriprise Financial, Inc. (AMP) : Free Stock Analysis Report
AAR Corp. (AIR) : Free Stock Analysis Report
Jabil, Inc. (JBL) : Free Stock Analysis Report
MRC Global Inc. (MRC) : Free Stock Analysis Report
