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4 Stocks Trading Near 52-Week High That Can Climb Further
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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 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 OI Glass (OI - Free Report) , MYR Group (MYRG - Free Report) , Coty (COTY - Free Report) and AutoNation (AN - 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 >= .08
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 0.08 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 or 2
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) or Zacks Rank #2 (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 22 stocks that made it through the screen:
O I Glass has been benefiting from strong demand for glass packaging, higher selling prices, and efforts to improve productivity and efficiency. Its consistent investments in boosting production capacity to meet the strong demand bode well. OI’s cost-control measures have helped it negate the impacts of higher costs and supply-chain issues on its margins. Its margin expansion initiative is expected to reap more than $100 million in benefits in 2023. Focus on acquisitions and innovations is also likely to fuel growth. Its glass melting technology, known as the MAGMA program, intends to reduce the amount of capital required to install, rebuild and operate its furnaces. O I Glass remains on track with its first MAGMA greenfield plant in Kentucky starting in 2024.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for OI’s 2022 earnings has increased 13.7% to $2.57 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 16.48%.
MYR Group is implementing targeted strategies to capture new market opportunities in the evolving clean energy landscape while continuing organic and acquisitive expansion. These make it a solid investment option in the utility sector. Last month, its unit MYR Group Construction Canada, Ltd. acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd. and its affiliate (“Powerline Plus Companies”). This acquisition will strengthen MYR Group’s transmission and distribution business as well as expand its geographical reach.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for MYRG’s 2023 earnings has increased 4.8% to $5.43 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 13.17%.
Coty has been benefiting from its focus on six strategic pillars that are aimed at sustainable growth. These include stabilizing Consumer Beauty make-up brands and mass fragrances; accelerating luxury fragrances and setting up Coty as a core player in prestige make-up; establishing a skincare portfolio in prestige and mass channels; strengthening e-commerce and Direct-to-Consumer (DTC) capabilities; growing presence in China via Prestige and certain Consumer Beauty brands; as well as setting Coty as an industry leader in sustainability. The company is committed to its savings initiatives, pricing actions and persistent premiumization to counter inflationary headwinds.
The company currently has a Zacks Rank of 2. The Zacks Consensus Estimate for COTY’s fiscal 2023 earnings has moved north by 12.5% to 36 cents per share in the past 30 days. The company surpassed the Zacks Consensus Estimate twice in the trailing four quarters while breaking even twice, the average surprise being 24.17%.
AutoNation's diversified product mix and multiple streams of income reduce risk profile and augur well for earnings and sales growth. The company's 2021 buyouts of Priority 1 Automotive and Peacock Automotive’s 11 dealerships are set to add $380 million and $420 million in annualized revenues, respectively. Enhanced digital solutions have helped AutoNation to further boost profitability and market presence. Initiatives like ship-to-home next day, curb-side pick-up option, and buy online, pick-up in stores options are picking pace, driving additional traffic to the company’s online site. Robust share repurchase program and digitization efforts are commendable.
The company currently has a Zacks Rank of 2. The Zacks Consensus Estimate for AN’s 2023 earnings has moved north by 4.3% to $20.56 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 4.76%.
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 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 OI Glass (OI - Free Report) , MYR Group (MYRG - Free Report) , Coty (COTY - Free Report) and AutoNation (AN - 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 >= .08
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 0.08 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 or 2
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) or Zacks Rank #2 (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 22 stocks that made it through the screen:
O I Glass has been benefiting from strong demand for glass packaging, higher selling prices, and efforts to improve productivity and efficiency. Its consistent investments in boosting production capacity to meet the strong demand bode well. OI’s cost-control measures have helped it negate the impacts of higher costs and supply-chain issues on its margins. Its margin expansion initiative is expected to reap more than $100 million in benefits in 2023. Focus on acquisitions and innovations is also likely to fuel growth. Its glass melting technology, known as the MAGMA program, intends to reduce the amount of capital required to install, rebuild and operate its furnaces. O I Glass remains on track with its first MAGMA greenfield plant in Kentucky starting in 2024.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for OI’s 2022 earnings has increased 13.7% to $2.57 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 16.48%.
MYR Group is implementing targeted strategies to capture new market opportunities in the evolving clean energy landscape while continuing organic and acquisitive expansion. These make it a solid investment option in the utility sector. Last month, its unit MYR Group Construction Canada, Ltd. acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd. and its affiliate (“Powerline Plus Companies”). This acquisition will strengthen MYR Group’s transmission and distribution business as well as expand its geographical reach.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for MYRG’s 2023 earnings has increased 4.8% to $5.43 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 13.17%.
Coty has been benefiting from its focus on six strategic pillars that are aimed at sustainable growth. These include stabilizing Consumer Beauty make-up brands and mass fragrances; accelerating luxury fragrances and setting up Coty as a core player in prestige make-up; establishing a skincare portfolio in prestige and mass channels; strengthening e-commerce and Direct-to-Consumer (DTC) capabilities; growing presence in China via Prestige and certain Consumer Beauty brands; as well as setting Coty as an industry leader in sustainability. The company is committed to its savings initiatives, pricing actions and persistent premiumization to counter inflationary headwinds.
The company currently has a Zacks Rank of 2. The Zacks Consensus Estimate for COTY’s fiscal 2023 earnings has moved north by 12.5% to 36 cents per share in the past 30 days. The company surpassed the Zacks Consensus Estimate twice in the trailing four quarters while breaking even twice, the average surprise being 24.17%.
AutoNation's diversified product mix and multiple streams of income reduce risk profile and augur well for earnings and sales growth. The company's 2021 buyouts of Priority 1 Automotive and Peacock Automotive’s 11 dealerships are set to add $380 million and $420 million in annualized revenues, respectively. Enhanced digital solutions have helped AutoNation to further boost profitability and market presence. Initiatives like ship-to-home next day, curb-side pick-up option, and buy online, pick-up in stores options are picking pace, driving additional traffic to the company’s online site. Robust share repurchase program and digitization efforts are commendable.
The company currently has a Zacks Rank of 2. The Zacks Consensus Estimate for AN’s 2023 earnings has moved north by 4.3% to $20.56 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 4.76%.
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