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Movement of stocks toward their 52-week high or low are closely tracked on a daily basis. It hardly seems rational to invest in stocks which are already about to scale to the highest point. To make the gamble worthwhile, it is imperative to consider the 52-week high criteria in conjunction with other parameters to ensure that the stock does not reverse the direction of movement anytime soon.
This is where our screener comes into play as it helps you to set the correct parameters with the 52-week high criteria that will compound portfolio returns. It will further eliminate the risks associated with ad-hoc techniques that can lead to pitfalls.
One of the relatively new entries in the investing rulebook, the 52-week investment strategy, is helping a wide group of investors rake in handsome profits. Borrowing from the basics of Momentum investing, this technique bets on the catchphrase “buy high and sell higher.” These investors have mastered the art of finding stocks that have strong upside potential and are still undervalued.
A Peek in to 52-Week High Stocks
Stocks near 52-week highs often instill the presumptive “adjustment and anchoring bias” in the minds of investors. This principle works on the belief that investors use the 52-week high price as a reference point and value stocks against this anchor.
Many a times such stocks are prevented from scaling higher despite robust potential due to the psychological bias of investors who fear that the stocks are overvalued and a price crash is impending.
A few of the stocks remain undervalued due to prolonged under reaction on part of investors, despite bullish growth drivers. Meanwhile, news pertaining to robust sales, surging profit levels, bullish earnings prospects and strategic acquisitions can drive the stock higher.
However, when a string of positive developments start dominating the market, investors find their under-reaction unwarranted and the renewed interest might drive stocks beyond the 52-week high bar. Wall Street’s fast paced trading makes it imperative for investors to step in before the market gets a whiff of it.
Also, recent academic research reveals that if a stock’s current price is near its 52-week high, there are high chances that it will outperform peers in the subsequent period. According to researchers George and Hwang, holding 52-week high stocks for six months has resulted in an average monthly gain of 0.45% between 1963 and 2001. Encouragingly, this is twice the gain that can be garnered from similar momentum-based strategies.
Setting the Right Filters
Our diligent screening technique has been deployed to find 52-week high stocks that hold tremendous potential compared to their respective industries. The added parameters are strong earnings growth expectations, sturdy value metrics and positive price momentum.
These stocks are relatively undervalued compared to their peers, in terms of earnings as well as sales, which make us believe that they will continue their rally for quite some time.
Current Price/52 Week High >= .80
This simply 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 and is likely to touch the 52-week high mark soon.
% 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 their peers.
One-Year EPS Growth F(1)/F(0) >= XIndMed
This helps choose stocks that have higher growth rates than the industry median. This is a meaningful indicator as decent earnings growth adds to investor optimism.
Zacks Rank = 1
No screening is complete without our proven Zacks Rank, which has proved its worth since 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price >= 5
This parameter will help screen stocks which are trading at $5 or higher.
Volume – 20 days (shares) >= 100000
Inclusion of this metric ensures that there is a substantial volume of shares that can be traded easily.
Here are seven of the 13 stocks that made it through the screen:
Coherent Inc. (COHR - Free Report) designs, manufactures and supplies electro-optical systems, and medical instruments utilizing laser, precision optic and microelectronic technologies. The company beat estimates in all of the trailing four quarters, at an average of 10.0%.
Leucadia National Corp. is a diversified financial services holding company focusing on personal and commercial lines of property and casualty insurance, life insurance, banking and lending and manufacturing. The company delivered an average positive earnings surprise of 179.0% over the trailing four quarters.
Louisiana-Pacific Corp. (LPX - Free Report) : Headquartered in Nashville, TN, the company together with its subsidiaries is engaged in the manufacturing and selling of building products primarily for use in new home construction, repair and remodeling, outdoor structures, light industrial and commercial construction. Louisiana-Pacific registered an impressive positive earnings surprise of 55% for the last four quarters.
Headquartered in Santa Clara, CA, Applied Materials (AMAT - Free Report) is engaged in developing, manufacturing and marketing semiconductor wafer fabrication equipment and related spare parts for the semiconductor industry. The company has an average positive surprise of 4.5% over the trailing four quarters.
Headquartered at Dublin, Ireland, Seagate Technology plc (STX - Free Report) is the second largest manufacturer of hard disk drives (HDDs) in the U.S. The company also develops other electronic data storage products such as SSD (solid state drive) and solid state hybrid drives (SSHD). Seagate has a positive earnings surprise of 3.3%, beating estimates thrice over the trailing four quarters.
Green Dot Corporation (GDOT - Free Report) is the largest provider of prepaid debit card products and prepaid card reloading services in the U.S. as well as a leader in the mobile banking space, courtesy of its GoBank mobile bank account offering. With four back-to-back beats in the trailing quarters, the company has a positive average earnings surprise of 38.8%.
Headquartered in Southfield, MI, Lear Corporation (LEA - Free Report) is a leading global supplier of automotive seating systems, electrical distribution systems and electronics. The company has an excellent earnings surprise history with an average positive surprise of 11.7% over the trailing four quarters. It managed to beat estimates four times in a row.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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 trial to the Research Wizard 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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7 Stocks Near 52-Week High to Buy Right Away
Movement of stocks toward their 52-week high or low are closely tracked on a daily basis. It hardly seems rational to invest in stocks which are already about to scale to the highest point. To make the gamble worthwhile, it is imperative to consider the 52-week high criteria in conjunction with other parameters to ensure that the stock does not reverse the direction of movement anytime soon.
This is where our screener comes into play as it helps you to set the correct parameters with the 52-week high criteria that will compound portfolio returns. It will further eliminate the risks associated with ad-hoc techniques that can lead to pitfalls.
One of the relatively new entries in the investing rulebook, the 52-week investment strategy, is helping a wide group of investors rake in handsome profits. Borrowing from the basics of Momentum investing, this technique bets on the catchphrase “buy high and sell higher.” These investors have mastered the art of finding stocks that have strong upside potential and are still undervalued.
A Peek in to 52-Week High Stocks
Stocks near 52-week highs often instill the presumptive “adjustment and anchoring bias” in the minds of investors. This principle works on the belief that investors use the 52-week high price as a reference point and value stocks against this anchor.
Many a times such stocks are prevented from scaling higher despite robust potential due to the psychological bias of investors who fear that the stocks are overvalued and a price crash is impending.
A few of the stocks remain undervalued due to prolonged under reaction on part of investors, despite bullish growth drivers. Meanwhile, news pertaining to robust sales, surging profit levels, bullish earnings prospects and strategic acquisitions can drive the stock higher.
However, when a string of positive developments start dominating the market, investors find their under-reaction unwarranted and the renewed interest might drive stocks beyond the 52-week high bar. Wall Street’s fast paced trading makes it imperative for investors to step in before the market gets a whiff of it.
Also, recent academic research reveals that if a stock’s current price is near its 52-week high, there are high chances that it will outperform peers in the subsequent period. According to researchers George and Hwang, holding 52-week high stocks for six months has resulted in an average monthly gain of 0.45% between 1963 and 2001. Encouragingly, this is twice the gain that can be garnered from similar momentum-based strategies.
Setting the Right Filters
Our diligent screening technique has been deployed to find 52-week high stocks that hold tremendous potential compared to their respective industries. The added parameters are strong earnings growth expectations, sturdy value metrics and positive price momentum.
These stocks are relatively undervalued compared to their peers, in terms of earnings as well as sales, which make us believe that they will continue their rally for quite some time.
Current Price/52 Week High >= .80
This simply 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 and is likely to touch the 52-week high mark soon.
% 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 their peers.
One-Year EPS Growth F(1)/F(0) >= XIndMed
This helps choose stocks that have higher growth rates than the industry median. This is a meaningful indicator as decent earnings growth adds to investor optimism.
Zacks Rank = 1
No screening is complete without our proven Zacks Rank, which has proved its worth since 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price >= 5
This parameter will help screen stocks which are trading at $5 or higher.
Volume – 20 days (shares) >= 100000
Inclusion of this metric ensures that there is a substantial volume of shares that can be traded easily.
Here are seven of the 13 stocks that made it through the screen:
Coherent Inc. (COHR - Free Report) designs, manufactures and supplies electro-optical systems, and medical instruments utilizing laser, precision optic and microelectronic technologies. The company beat estimates in all of the trailing four quarters, at an average of 10.0%.
Leucadia National Corp. is a diversified financial services holding company focusing on personal and commercial lines of property and casualty insurance, life insurance, banking and lending and manufacturing. The company delivered an average positive earnings surprise of 179.0% over the trailing four quarters.
Louisiana-Pacific Corp. (LPX - Free Report) : Headquartered in Nashville, TN, the company together with its subsidiaries is engaged in the manufacturing and selling of building products primarily for use in new home construction, repair and remodeling, outdoor structures, light industrial and commercial construction. Louisiana-Pacific registered an impressive positive earnings surprise of 55% for the last four quarters.
Headquartered in Santa Clara, CA, Applied Materials (AMAT - Free Report) is engaged in developing, manufacturing and marketing semiconductor wafer fabrication equipment and related spare parts for the semiconductor industry. The company has an average positive surprise of 4.5% over the trailing four quarters.
Headquartered at Dublin, Ireland, Seagate Technology plc (STX - Free Report) is the second largest manufacturer of hard disk drives (HDDs) in the U.S. The company also develops other electronic data storage products such as SSD (solid state drive) and solid state hybrid drives (SSHD). Seagate has a positive earnings surprise of 3.3%, beating estimates thrice over the trailing four quarters.
Green Dot Corporation (GDOT - Free Report) is the largest provider of prepaid debit card products and prepaid card reloading services in the U.S. as well as a leader in the mobile banking space, courtesy of its GoBank mobile bank account offering. With four back-to-back beats in the trailing quarters, the company has a positive average earnings surprise of 38.8%.
Headquartered in Southfield, MI, Lear Corporation (LEA - Free Report) is a leading global supplier of automotive seating systems, electrical distribution systems and electronics. The company has an excellent earnings surprise history with an average positive surprise of 11.7% over the trailing four quarters. It managed to beat estimates four times in a row.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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 trial to the Research Wizard 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »