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5 Stocks Trading Near 52-Week High That Can Scale Higher
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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 Oshkosh (OSK - Free Report) , PACCAR (PCAR - Free Report) , Terex (TEX - Free Report) , KB Home (KBH - Free Report) and Vertiv (VRT - 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 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.
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 >= .80
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 0.8 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 >= 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 five picks of the 13 stocks that made it through the screen:
Oshkosh is a producer and seller of a varied range of vehicle bodies and specialty vehicles. Frequent business wins and a comprehensive offering of innovative new products are set to drive Oshkosh’s prospects. Record consolidated backlog of $15 billion provides enough visibility for the coming years. The Hinowa buyout has accelerated Oshkosh’s electrification capabilities, providing growth opportunities across core and adjacent markets. Upbeat full-year 2023 outlook raises confidence. The company estimates full-year 2023 sales to be around $9.5 billion, up from the previous estimate of $8.65 billion.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for OSK’s 2023 earnings has been revised upward by 21% to $7.38 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate twice in the trailing four quarters while missing the same on two occasions, the average surprise being 27.45%.
PACCAR is a leading manufacturer of heavy-duty trucks in the world and has substantial manufacturing exposure to light/medium trucks. The new DAF lineup comprising XF, XG and XD models augurs well. Accelerated efforts toward electrification, connected vehicle services, and advanced driver-assistance system options are set to bolster the company’s prospects. High truck utilization and increased average fleet age are positively impacting the company’s Parts segment. Revenues from the Parts segment are likely to grow 10-12% year over year in second-quarter 2023. The company's total debt-to-capital ratio stands at 0.46, lower than its industry's 0.64. Low leverage increases its financial flexibility to tap growth opportunities.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for PCAR’s 2023 earnings has been revised upward by 9.1% to $8.55 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.21%.
Terex is a global manufacturer of aerial work platforms, materials processing machinery and cranes. The company has been gaining from strong demand and improved volumes. It has a solid backlog level, which was $4.1 billion at the end of first-quarter 2023, positioning it well for improved results in the coming quarters. The company raised its full-year outlook, backed by its solid first-quarter performance. It expects earnings per share between $5.60 and $6.00, indicating 34% growth at the mid-point from the 2022 reported level.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for TEX’s 2023 earnings has been revised upward by 9.1% to $6.46 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 32.8%.
KB Home is a well-known homebuilder in the United States and one of the largest in the state. KBH invests aggressively in land acquisition and development, mainly in high-end locations, critical for community count and top-line growth. This has eventually helped the company reduce debt. The company’s success in increasing scale and profitability, improving asset efficiency and monetizing deferred tax assets under the Returns-Focused Growth Plan has enabled it to generate solid operating cash flow. The company intends to focus on increasing Built-to-Order sales that will, in turn, help it gain sales momentum in 2024.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for KB Home’s 2023 earnings has been revised upward by 2.3% in the past 30 days to $6.29 per share. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 20.66%.
Vertiv Holdings specializes in designing, manufacturing and servicing critical digital infrastructure technologies and life cycle services. The firm aims to help its clients deal with critical issues facing data centers, communication networks and commercial and industrial facilities through its portfolio of power, cooling and IT infrastructure solutions and services. Its products are used in social media, finance, healthcare, transportation, retail, education and government sectors.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for VRT’s 2023 earnings has increased 18.4% in the past 30 days to $1.48 per share. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same once, the average surprise being 25.66%.
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.
Image: Bigstock
5 Stocks Trading Near 52-Week High 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 Oshkosh (OSK - Free Report) , PACCAR (PCAR - Free Report) , Terex (TEX - Free Report) , KB Home (KBH - Free Report) and Vertiv (VRT - 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 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.
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 >= .80
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 0.8 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 >= 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 five picks of the 13 stocks that made it through the screen:
Oshkosh is a producer and seller of a varied range of vehicle bodies and specialty vehicles. Frequent business wins and a comprehensive offering of innovative new products are set to drive Oshkosh’s prospects. Record consolidated backlog of $15 billion provides enough visibility for the coming years. The Hinowa buyout has accelerated Oshkosh’s electrification capabilities, providing growth opportunities across core and adjacent markets. Upbeat full-year 2023 outlook raises confidence. The company estimates full-year 2023 sales to be around $9.5 billion, up from the previous estimate of $8.65 billion.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for OSK’s 2023 earnings has been revised upward by 21% to $7.38 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate twice in the trailing four quarters while missing the same on two occasions, the average surprise being 27.45%.
PACCAR is a leading manufacturer of heavy-duty trucks in the world and has substantial manufacturing exposure to light/medium trucks. The new DAF lineup comprising XF, XG and XD models augurs well. Accelerated efforts toward electrification, connected vehicle services, and advanced driver-assistance system options are set to bolster the company’s prospects. High truck utilization and increased average fleet age are positively impacting the company’s Parts segment. Revenues from the Parts segment are likely to grow 10-12% year over year in second-quarter 2023. The company's total debt-to-capital ratio stands at 0.46, lower than its industry's 0.64. Low leverage increases its financial flexibility to tap growth opportunities.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for PCAR’s 2023 earnings has been revised upward by 9.1% to $8.55 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.21%.
Terex is a global manufacturer of aerial work platforms, materials processing machinery and cranes. The company has been gaining from strong demand and improved volumes. It has a solid backlog level, which was $4.1 billion at the end of first-quarter 2023, positioning it well for improved results in the coming quarters. The company raised its full-year outlook, backed by its solid first-quarter performance. It expects earnings per share between $5.60 and $6.00, indicating 34% growth at the mid-point from the 2022 reported level.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for TEX’s 2023 earnings has been revised upward by 9.1% to $6.46 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 32.8%.
KB Home is a well-known homebuilder in the United States and one of the largest in the state. KBH invests aggressively in land acquisition and development, mainly in high-end locations, critical for community count and top-line growth. This has eventually helped the company reduce debt. The company’s success in increasing scale and profitability, improving asset efficiency and monetizing deferred tax assets under the Returns-Focused Growth Plan has enabled it to generate solid operating cash flow. The company intends to focus on increasing Built-to-Order sales that will, in turn, help it gain sales momentum in 2024.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for KB Home’s 2023 earnings has been revised upward by 2.3% in the past 30 days to $6.29 per share. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same on one occasion, the average surprise being 20.66%.
Vertiv Holdings specializes in designing, manufacturing and servicing critical digital infrastructure technologies and life cycle services. The firm aims to help its clients deal with critical issues facing data centers, communication networks and commercial and industrial facilities through its portfolio of power, cooling and IT infrastructure solutions and services. Its products are used in social media, finance, healthcare, transportation, retail, education and government sectors.
The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for VRT’s 2023 earnings has increased 18.4% in the past 30 days to $1.48 per share. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same once, the average surprise being 25.66%.
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.
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/.