For Immediate Release
Chicago, IL – October 16, 2020 – Stocks in this week’s article are Group 1 Automotive, Inc. (GPI - Free Report) , Owens & Minor, Inc. (OMI - Free Report) , TRI Pointe Group, Inc. (TPH - Free Report) , Target Corporation (TGT - Free Report) and Best Buy Co., Inc. (BBY - Free Report) .
Stocks Near 52-Week Highs to Carry Momentum Forward
Investors generally consider 52-week highs as a criterion to pick stocks. This is because stocks near that level are considered as winners.
However, given the high price, investors often wonder if the stock is overpriced. While the speculations are not absolutely baseless, all stocks hitting 52-week highs are not necessarily overpriced.
Investors, in fact, might lose out on top gainers in an attempt to avoid the steep prices.
A good stock can maintain the momentum and keep scaling new highs. So, 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, which borrows from the basics of momentum investing. This technique bets on “buy high, sell higher.”
52-Week High: A Good Indicator
Many a times, stocks hitting their 52-week highs fail to scale higher despite having potential. This is because investors fear that the stocks are overvalued and expect the price to crash.
In fact, overvaluation is natural for most of these stocks as investors’ focus (or willingness to pay premium) has only helped reach the level. However, 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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1076348/6-stocks-near-52week-highs-poised-to-carry-the-momentum-ahead
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