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5 Stocks Trading Near 52-Week Highs 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 Archer Daniels Midland, OI Glass, Applied Industrial Technologies, RPM International and W&T Offshore 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.
Here are our five picks of the 42 stocks that made it through the screen:
Archer Daniels Midland is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. The company has been gaining from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment of ADM, aided by significant gains in the Human and Animal Nutrition units, remains the key growth driver. The company expects the nutrition segment to record operating profit growth of 20% in 2022.
The company currently sports a Zacks Rank of 1 and has a VGM Score of A. The Zacks Consensus Estimate for Archer Daniels Midland’s 2022 earnings has been revised upward by 7.4% to $7.40 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 26.22%.
W&T Offshore is a leading oil and natural gas explorer, with operations primarily focused on resources located off the coast of Gulf of Mexico. In April, the company acquired the remaining working interests in the producing properties of the U.S. Gulf of Mexico from an undisclosed seller. For 2022, W&T Offshore revised its average daily oil-equivalent production upward to 39.5-42 MBoe/d from 38.2-42.2 MBoe/d mentioned earlier. The metric suggests an improvement from 38.1 MBoe/d reported last year. Higher production will likely boost the company’s bottom line.
The company currently sports a Zacks Rank of 1 and has a VGM Score of A. The Zacks Consensus Estimate for W&T Offshore’s 2022 earnings has remained steady at $1.95 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 75.6%.
Applied Industrial Technologies is a distributor of value-added industrial products — including engineered fluid power components, bearings, specialty flow control solutions, power transmission products and miscellaneous industrial supplies. The company is poised to benefit from improving demand for its products and solutions along with healthy cross-selling actions and growth investments.
Strength across mining, metals, agriculture, chemicals, technology, food & beverage, and machinery markets are benefiting its Engineered Solutions segment. The company will likely benefit from its focus on improving the product line, value-added services and initiatives to drive operational excellence as well as cost-saving efforts in the long term.
The company currently sports a Zacks Rank of 1 and has a VGM Score of B. The Zacks Consensus Estimate for Applied Industrial Technologies’ 2022 earnings has moved up by 4.6% to $7.52 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while matching the same on one occasion, the average surprise being 24.77%.
RPM International manufactures and markets high-performance coatings, sealants and specialty chemicals, primarily for maintenance and improvement applications. The company is benefiting from the improvement in the construction and industrial maintenance activity, a rebound in energy markets and its focus on investments in the fastest-growing areas of its business. RPM intends to increase prices of certain raw materials, labor and packaging to forgo unprecedented supply-chain and inflationary woes.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for RPM International’s 2022 earnings has moved up by 2.4% to $4.60 per share in the past 30 days. The company missed the Zacks Consensus Estimate twice in the trailing four quarters while surpassing the same on two occasions, the average surprise being 7.34%.
OI Glass is the largest manufacturer of glass containers in the world. The company is poised to benefit from strong demand for glass packaging, higher selling prices and efforts to improve productivity and efficiency. Cost-control measures will help the company in negating the impact of higher costs and supply-chain issues on its margins in the near term. Its margin-expansion initiative is expected to reap annual benefits of $50 million in the 2022-2024 period. Benefits from its portfolio optimization program and a focus on acquisitions and innovations are likely to fuel growth.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for OI Glass’ 2022 earnings has been revised upward by 2.7% to $2.25 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 14.92%.
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights Archer Daniels Midland, OI Glass, Applied Industrial Technologies, RPM International and W&T Offshore
For Immediate Release
Chicago, IL – November 14, 2022 – Stocks in this week’s article are Archer Daniels Midland (ADM - Free Report) , OI Glass (OI - Free Report) , Applied Industrial Technologies (AIT - Free Report) , RPM International (RPM - Free Report) and W&T Offshore (WTI - Free Report) .
5 Stocks Trading Near 52-Week Highs 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 Archer Daniels Midland, OI Glass, Applied Industrial Technologies, RPM International and W&T Offshore 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.
Here are our five picks of the 42 stocks that made it through the screen:
Archer Daniels Midland is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. The company has been gaining from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment of ADM, aided by significant gains in the Human and Animal Nutrition units, remains the key growth driver. The company expects the nutrition segment to record operating profit growth of 20% in 2022.
The company currently sports a Zacks Rank of 1 and has a VGM Score of A. The Zacks Consensus Estimate for Archer Daniels Midland’s 2022 earnings has been revised upward by 7.4% to $7.40 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 26.22%.
W&T Offshore is a leading oil and natural gas explorer, with operations primarily focused on resources located off the coast of Gulf of Mexico. In April, the company acquired the remaining working interests in the producing properties of the U.S. Gulf of Mexico from an undisclosed seller. For 2022, W&T Offshore revised its average daily oil-equivalent production upward to 39.5-42 MBoe/d from 38.2-42.2 MBoe/d mentioned earlier. The metric suggests an improvement from 38.1 MBoe/d reported last year. Higher production will likely boost the company’s bottom line.
The company currently sports a Zacks Rank of 1 and has a VGM Score of A. The Zacks Consensus Estimate for W&T Offshore’s 2022 earnings has remained steady at $1.95 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 75.6%.
Applied Industrial Technologies is a distributor of value-added industrial products — including engineered fluid power components, bearings, specialty flow control solutions, power transmission products and miscellaneous industrial supplies. The company is poised to benefit from improving demand for its products and solutions along with healthy cross-selling actions and growth investments.
Strength across mining, metals, agriculture, chemicals, technology, food & beverage, and machinery markets are benefiting its Engineered Solutions segment. The company will likely benefit from its focus on improving the product line, value-added services and initiatives to drive operational excellence as well as cost-saving efforts in the long term.
The company currently sports a Zacks Rank of 1 and has a VGM Score of B. The Zacks Consensus Estimate for Applied Industrial Technologies’ 2022 earnings has moved up by 4.6% to $7.52 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while matching the same on one occasion, the average surprise being 24.77%.
RPM International manufactures and markets high-performance coatings, sealants and specialty chemicals, primarily for maintenance and improvement applications. The company is benefiting from the improvement in the construction and industrial maintenance activity, a rebound in energy markets and its focus on investments in the fastest-growing areas of its business. RPM intends to increase prices of certain raw materials, labor and packaging to forgo unprecedented supply-chain and inflationary woes.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for RPM International’s 2022 earnings has moved up by 2.4% to $4.60 per share in the past 30 days. The company missed the Zacks Consensus Estimate twice in the trailing four quarters while surpassing the same on two occasions, the average surprise being 7.34%.
OI Glass is the largest manufacturer of glass containers in the world. The company is poised to benefit from strong demand for glass packaging, higher selling prices and efforts to improve productivity and efficiency. Cost-control measures will help the company in negating the impact of higher costs and supply-chain issues on its margins in the near term. Its margin-expansion initiative is expected to reap annual benefits of $50 million in the 2022-2024 period. Benefits from its portfolio optimization program and a focus on acquisitions and innovations are likely to fuel growth.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for OI Glass’ 2022 earnings has been revised upward by 2.7% to $2.25 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 14.92%.
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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2017150/5-stocks-trading-near-52-week-high-that-can-scale-higher
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.