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4 Stocks Trading Near 52-Week High With More Upside Potential
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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 speculation is 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 Sunoco (SUN - Free Report) , Integer Holdings (ITGR - Free Report) , Deutsche Bank (DB - Free Report) and Stride (LRN - Free Report) are expected to maintain their 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 times, stocks that hit 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 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
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) 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 12 stocks that made it through the screen:
Sunoco LP is a master limited partnership. It is among the biggest motor fuel distributors in the U.S. wholesale market in terms of volumes. The partnership’s prime business comprises the distribution of motor fuel to roughly 10,000 customers under long-term distribution contracts that include independent dealers, commercial customers, convenience stores as well as distributors.
The distribution networks of Sunoco reflect a strong business with sustainable and predictable cash flow. Recent acquisitions have expanded the partnership’s business. Sunoco and NuStar Energy L.P. (NS) have jointly announced a definitive merger agreement, wherein Sunoco will acquire NuStar in an all-stock transaction valued at $7.3 billion, inclusive of assumed debt. This acquisition is expected to bolster Sunoco's financial base, enhancing the partnership's credit standing and facilitating a growing distribution, while continuing its effective capital allocation strategy on a broader scale.
The Zacks Consensus Estimate for SUN’s 2024 earnings has increased 27.7% to $4.89 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate twice in the trailing four quarters while missing the same twice, the average surprise being 28.33%.
Integer Holdings manufactures and develops medical devices and components primarily for original equipment manufacturers. The company is focused on developing new products, improving and enhancing existing products, and expanding the use of its products in new or tangential applications. In addition to its internal technology and capability development efforts aimed at providing its customers with differentiated solutions, the company engages outside research institutions for unique technology projects.
Integer Holdings has a stable footprint in the cardiac, neuromodulation, orthopedics, vascular and advanced surgical markets. Its primary customers include large, multi-national original equipment manufacturers and their affiliated subsidiaries. ITGR is focused on sales efforts to increase its market penetration in the Cardio & Vascular, Neuromodulation and Non-Medical Electrochem markets. The company is undertaking strategic initiatives to maintain its leadership position in the cardiac rhythm management market.
The Zacks Consensus Estimate for ITGR’s 2023 earnings has moved south by 0.3% to $2.87 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 289.32%.
Deutsche Bank AG is the largest bank in Germany and one of the largest financial institutions in the world, as measured by total assets. It offers a wide variety of investment, financial and related products and services.
The bank’s efforts to shift focus from investment banking to more stable businesses, such as private banks, corporate banks and the asset management unit, will likely continue to aid revenues in the upcoming period. The company benefits from its well-diversified deposit base across various client segments and regions.
The Zacks Consensus Estimate for DB’s 2024 earnings has increased by 0.9% to $2.24 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same once, the average surprise being 18.63%.
Stride is a premier provider of K-12 education for students, schools and districts, including career learning services through middle and high school curriculum. Stride’s Career Learning segment is thriving, considering the various growth initiatives undertaken to support the uptrend. After the acquisition of three adult learning companies, Galvanize, Tech Elevator, and MedCerts, in 2020, the company’s product offerings in this segment expanded notably.
Stride has been banking on Career Learning enrollment strength, increases in revenue per enrollment and Adult Learning growth. Also, a focus on improving the user experience, enhancing teacher tools and strengthening student engagement bodes well. LRN’s adult learning business is benefiting from stronger student retention, backed by the online and hybrid education trend, non-traditional educational technologies, and low-cost certificate programs. The ongoing focus on cost reduction and operating efficiency is expected to aid margins in the near term.
The Zacks Consensus Estimate for LRN’s fiscal 2024 earnings has moved north by 7.7% to $4.31 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 45.24%.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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.
Image: Bigstock
4 Stocks Trading Near 52-Week High With More Upside Potential
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 speculation is 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 Sunoco (SUN - Free Report) , Integer Holdings (ITGR - Free Report) , Deutsche Bank (DB - Free Report) and Stride (LRN - Free Report) are expected to maintain their 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 times, stocks that hit 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 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
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) 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 12 stocks that made it through the screen:
Sunoco LP is a master limited partnership. It is among the biggest motor fuel distributors in the U.S. wholesale market in terms of volumes. The partnership’s prime business comprises the distribution of motor fuel to roughly 10,000 customers under long-term distribution contracts that include independent dealers, commercial customers, convenience stores as well as distributors.
The distribution networks of Sunoco reflect a strong business with sustainable and predictable cash flow. Recent acquisitions have expanded the partnership’s business. Sunoco and NuStar Energy L.P. (NS) have jointly announced a definitive merger agreement, wherein Sunoco will acquire NuStar in an all-stock transaction valued at $7.3 billion, inclusive of assumed debt. This acquisition is expected to bolster Sunoco's financial base, enhancing the partnership's credit standing and facilitating a growing distribution, while continuing its effective capital allocation strategy on a broader scale.
The Zacks Consensus Estimate for SUN’s 2024 earnings has increased 27.7% to $4.89 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate twice in the trailing four quarters while missing the same twice, the average surprise being 28.33%.
Integer Holdings manufactures and develops medical devices and components primarily for original equipment manufacturers. The company is focused on developing new products, improving and enhancing existing products, and expanding the use of its products in new or tangential applications. In addition to its internal technology and capability development efforts aimed at providing its customers with differentiated solutions, the company engages outside research institutions for unique technology projects.
Integer Holdings has a stable footprint in the cardiac, neuromodulation, orthopedics, vascular and advanced surgical markets. Its primary customers include large, multi-national original equipment manufacturers and their affiliated subsidiaries. ITGR is focused on sales efforts to increase its market penetration in the Cardio & Vascular, Neuromodulation and Non-Medical Electrochem markets. The company is undertaking strategic initiatives to maintain its leadership position in the cardiac rhythm management market.
The Zacks Consensus Estimate for ITGR’s 2023 earnings has moved south by 0.3% to $2.87 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 289.32%.
Deutsche Bank AG is the largest bank in Germany and one of the largest financial institutions in the world, as measured by total assets. It offers a wide variety of investment, financial and related products and services.
The bank’s efforts to shift focus from investment banking to more stable businesses, such as private banks, corporate banks and the asset management unit, will likely continue to aid revenues in the upcoming period. The company benefits from its well-diversified deposit base across various client segments and regions.
The Zacks Consensus Estimate for DB’s 2024 earnings has increased by 0.9% to $2.24 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same once, the average surprise being 18.63%.
Stride is a premier provider of K-12 education for students, schools and districts, including career learning services through middle and high school curriculum. Stride’s Career Learning segment is thriving, considering the various growth initiatives undertaken to support the uptrend. After the acquisition of three adult learning companies, Galvanize, Tech Elevator, and MedCerts, in 2020, the company’s product offerings in this segment expanded notably.
Stride has been banking on Career Learning enrollment strength, increases in revenue per enrollment and Adult Learning growth. Also, a focus on improving the user experience, enhancing teacher tools and strengthening student engagement bodes well. LRN’s adult learning business is benefiting from stronger student retention, backed by the online and hybrid education trend, non-traditional educational technologies, and low-cost certificate programs. The ongoing focus on cost reduction and operating efficiency is expected to aid margins in the near term.
The Zacks Consensus Estimate for LRN’s fiscal 2024 earnings has moved north by 7.7% to $4.31 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 45.24%.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back-testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
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/.