We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Stocks Trading Near 52-Week High That Can Climb Further
Read MoreHide Full Article
Stocks hitting their 52-week high and delivering consistent performance in the past few quarters offer attractive opportunities to investors while building a portfolio. This is because stocks near that level are perceived to be winners. However, stocks touching a new 52-week high 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 JAKKS Pacific (JAKK - Free Report) , Unum Group (UNM - Free Report) , Clean Harbors (CLH - Free Report) and Super Micro Computer (SMCI - Free Report) 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 strategy borrows from the basics of momentum investing. This technique 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.
In fact, overvaluation is natural for most of these stocks as investors’ focus (or willingness to pay a 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 >= .11
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 0.11 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
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 >= 8
This parameter will help screen stocks that are trading at $8 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 24 stocks that made it through the screen:
JAKKS Pacific is a multi-brand company that has been designing and marketing a broad range of toys and consumer products since 1995. The company has been benefiting from strategic acquisitions, a solid international footprint, focus on innovation and collaborations with popular brands and movie franchisees. Moreover, the company realizes the importance of online retailing and has shifted its focus to boosting online sales. It also continues to modify its sales and logistics capabilities to support the same.
The company currently sports a Zacks Rank of 1 and has a VGM Score of A. The Zacks Consensus Estimate for JAKKS Pacific’s 2022 earnings has been revised upward by 74.6% to $4.87 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 154.98%.
Unum Group provides long-term care insurance, life insurance, employer- and employee-paid group benefits and related services. Unum’s conservative pricing and reservation practices have contributed to overall profitability. The sustained increase in premiums is fueled by high persistency levels in core business lines and strong sales volume along with solid benefits experience. The continued rollout of dental products and geographic expansion have been paying off as acquired dental insurance businesses are growing in the United States and the U.K.
The company currently sports a Zacks Rank of 1 and has a VGM Score of B. The Zacks Consensus Estimate for Unum Group’s 2022 earnings has been revised upward by 16.9% to $6.03 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 30.13%.
Clean Harbors is a leading provider of environmental, energy and industrial services in North America, wherein it operates the largest number of hazardous waste incinerators, landfills and treatment, storage and disposal facilities. The company continues to make capital investments to enhance its quality and comply with government and local regulations. Acquisitions help the company expand its business across multiple lines of services. Consistent share repurchases boost investor confidence and positively impact the company's earnings per share.
The company currently sports a Zacks Rank of 1 and has a VGM Score of B. The Zacks Consensus Estimate for Clean Harbors’ 2022 earnings has been revised upward by 52.7% to $6.78 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 37.51%.
Super Micro Computer designs, develops, manufactures and sells energy-efficient, application-optimized server solutions based on the x86 architecture. SMCI’s solutions include a range of rack mount and blade server systems as well as components. Super Micro Computer emphasizes superior product design and uncompromising quality control to produce industry-leading server boards, chassis and server systems.
The company currently sports a Zacks Rank of 1 and has a VGM Score of B. The Zacks Consensus Estimate for Super Micro’s fiscal 2023 earnings has moved up by 30.4% to $7.50 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 20.26%.
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 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.
Image: Bigstock
4 Stocks Trading Near 52-Week High That Can Climb Further
Stocks hitting their 52-week high and delivering consistent performance in the past few quarters offer attractive opportunities to investors while building a portfolio. This is because stocks near that level are perceived to be winners. However, stocks touching a new 52-week high 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 JAKKS Pacific (JAKK - Free Report) , Unum Group (UNM - Free Report) , Clean Harbors (CLH - Free Report) and Super Micro Computer (SMCI - Free Report) 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 strategy borrows from the basics of momentum investing. This technique 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.
In fact, overvaluation is natural for most of these stocks as investors’ focus (or willingness to pay a 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 >= .11
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 0.11 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
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 >= 8
This parameter will help screen stocks that are trading at $8 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 24 stocks that made it through the screen:
JAKKS Pacific is a multi-brand company that has been designing and marketing a broad range of toys and consumer products since 1995. The company has been benefiting from strategic acquisitions, a solid international footprint, focus on innovation and collaborations with popular brands and movie franchisees. Moreover, the company realizes the importance of online retailing and has shifted its focus to boosting online sales. It also continues to modify its sales and logistics capabilities to support the same.
The company currently sports a Zacks Rank of 1 and has a VGM Score of A. The Zacks Consensus Estimate for JAKKS Pacific’s 2022 earnings has been revised upward by 74.6% to $4.87 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 154.98%.
Unum Group provides long-term care insurance, life insurance, employer- and employee-paid group benefits and related services. Unum’s conservative pricing and reservation practices have contributed to overall profitability. The sustained increase in premiums is fueled by high persistency levels in core business lines and strong sales volume along with solid benefits experience. The continued rollout of dental products and geographic expansion have been paying off as acquired dental insurance businesses are growing in the United States and the U.K.
The company currently sports a Zacks Rank of 1 and has a VGM Score of B. The Zacks Consensus Estimate for Unum Group’s 2022 earnings has been revised upward by 16.9% to $6.03 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 30.13%.
Clean Harbors is a leading provider of environmental, energy and industrial services in North America, wherein it operates the largest number of hazardous waste incinerators, landfills and treatment, storage and disposal facilities. The company continues to make capital investments to enhance its quality and comply with government and local regulations. Acquisitions help the company expand its business across multiple lines of services. Consistent share repurchases boost investor confidence and positively impact the company's earnings per share.
The company currently sports a Zacks Rank of 1 and has a VGM Score of B. The Zacks Consensus Estimate for Clean Harbors’ 2022 earnings has been revised upward by 52.7% to $6.78 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 37.51%.
Super Micro Computer designs, develops, manufactures and sells energy-efficient, application-optimized server solutions based on the x86 architecture. SMCI’s solutions include a range of rack mount and blade server systems as well as components. Super Micro Computer emphasizes superior product design and uncompromising quality control to produce industry-leading server boards, chassis and server systems.
The company currently sports a Zacks Rank of 1 and has a VGM Score of B. The Zacks Consensus Estimate for Super Micro’s fiscal 2023 earnings has moved up by 30.4% to $7.50 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 20.26%.
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 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