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5 Fundamentally Sound High-Flying Stocks to Fly Higher
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No matter how disciplined and systematic investors are, the equity market volatility will always manage to get some in the end. Only a few lucky ones would rake in the moolah while others fall victim to ad hoc strategies.
Here we will discuss one tried and tested technique – picking stocks nearing their 52-week highs -- as it seldom disappoints when clubbed with the right set of parameters.
Why is 52-Week High a Good Indicator
Investing in stocks that are trading near their 52-week highs bears the risk of falling fast as the market might consider them overvalued. But there is more on the positive side. There may be a broad set of factors including impressive sales, robust profitability and bullish earnings prospects driving the stocks up. Recent major developments may also send these stocks soaring.
So investing in stocks near their 52-week high is akin to following the momentum strategy, which is based on the understanding that once a trend is established it is likely to continue.
However, betting on these high-flying stocks without a clear investment blueprint may be risky. And for that very reason we’ve added a few other parameters to arrive at a foolproof strategy.
We will screen for stocks which are close to their 52-week highs, but still have strong growth prospects relative to their respective industries. In addition, we’ve made sure these stocks are relatively undervalued compared to their peers, in terms of earnings as well as sales.
With positive momentum in the stock price, blended with strong earnings growth expectations and great value metrics, we believe these stocks will continue their uptrend for quite some time to come.
A Safe and Sound Strategy
Current Price/52 Week High >= .80
(This simply measures the ratio between current price to 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 only within 20% of its 52-week high range and is likely to touch the 52-week threshold soon.)
% Change Price – 4 Weeks > 0
(It ensures that the price of the stock has moved north over the past four weeks.)
% Change Price – 12 Weeks > 0
(This metric ensures that the stock has continued its upward price momentum over the past three months we well.)
Price/Sales <= XIndMed
(Lower the ratio, the higher is the benefit for investors as they have to pay a smaller price for the same amount of sales generated by the company.)
P/E using F(1) Estimate <= XIndMed
(This metric measures the amount that an investor will invest in a company to obtain one dollar of that company’s earnings. This metric narrows down the list of stocks to those that are undervalued compared to their peers.)
One-Year EPS Growth F(1)/F(0) >= XIndMed
(This metric will help in zeroing in on stocks that have growth rates higher than the industry median. This is a meaningful indicator as decent earnings growth always adds to investor optimism.)
Zacks Rank = 1
(No screening is complete without our proven Zacks Rank, which has proved its worth since inception. It is a fundamental truth that stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) have always managed to beat adversities and outperformed the market.)
Current Price >= 5
This parameter will help in screening stocks which are trading at a minimum price of $5 or higher.
Volume – 20 days (shares) >= 100000
Inclusion of this metric ensures that there is a substantial volume of shares that can be traded easily.
Here are five of the eleven stocks that made it through the screen:
FTI Consulting Inc. (FCN - Free Report) : Based in Baltimore, MD, and founded in 1982, FTI Consulting Inc. provides specialized consulting services across 26 foreign countries. This company holds a Zacks Rank #1 and has a strong four-quarter trailing surprise of 30.96%.
Fresh Del Monte Produce Inc. (FDP - Free Report) : This company and its subsidiaries are engaged in the production, marketing and distribution of fresh and fresh-cut fruit and vegetables across the globe. This company also sports a Zacks Rank #1.
Ryerson Holding Corporation (RYI - Free Report) : This company along with its subsidiaries is engaged in the processing and distribution of metals like stainless steel, aluminum, carbon steel, and alloy steels, as well as nickel and red metals. Sporting a Zacks Rank #1 (Strong Buy), the stock has an impressive four-quarter trailing surprise of 118.19%.
AEISAdvanced Energy Industries, Inc. (AEIS - Free Report) : This firm designs, manufactures, sells, and supports power conversion products and solutions that are extensively deployed by semiconductor, solar panel, and similar thin film manufacturers. This Zacks Rank #1 company has a decent long-term earnings growth potential of 12%.
Spark Energy, Inc. : This retail energy services company is engaged in the distribution of natural gas and electricity to residential, commercial, and industrial customers. This Zacks Rank #1 company has a stellar four-quarter trailing surprise of 780.42%.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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5 Fundamentally Sound High-Flying Stocks to Fly Higher
No matter how disciplined and systematic investors are, the equity market volatility will always manage to get some in the end. Only a few lucky ones would rake in the moolah while others fall victim to ad hoc strategies.
Here we will discuss one tried and tested technique – picking stocks nearing their 52-week highs -- as it seldom disappoints when clubbed with the right set of parameters.
Why is 52-Week High a Good Indicator
Investing in stocks that are trading near their 52-week highs bears the risk of falling fast as the market might consider them overvalued. But there is more on the positive side. There may be a broad set of factors including impressive sales, robust profitability and bullish earnings prospects driving the stocks up. Recent major developments may also send these stocks soaring.
So investing in stocks near their 52-week high is akin to following the momentum strategy, which is based on the understanding that once a trend is established it is likely to continue.
However, betting on these high-flying stocks without a clear investment blueprint may be risky. And for that very reason we’ve added a few other parameters to arrive at a foolproof strategy.
We will screen for stocks which are close to their 52-week highs, but still have strong growth prospects relative to their respective industries. In addition, we’ve made sure these stocks are relatively undervalued compared to their peers, in terms of earnings as well as sales.
With positive momentum in the stock price, blended with strong earnings growth expectations and great value metrics, we believe these stocks will continue their uptrend for quite some time to come.
A Safe and Sound Strategy
Current Price/52 Week High >= .80
(This simply measures the ratio between current price to 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 only within 20% of its 52-week high range and is likely to touch the 52-week threshold soon.)
% Change Price – 4 Weeks > 0
(It ensures that the price of the stock has moved north over the past four weeks.)
% Change Price – 12 Weeks > 0
(This metric ensures that the stock has continued its upward price momentum over the past three months we well.)
Price/Sales <= XIndMed
(Lower the ratio, the higher is the benefit for investors as they have to pay a smaller price for the same amount of sales generated by the company.)
P/E using F(1) Estimate <= XIndMed
(This metric measures the amount that an investor will invest in a company to obtain one dollar of that company’s earnings. This metric narrows down the list of stocks to those that are undervalued compared to their peers.)
One-Year EPS Growth F(1)/F(0) >= XIndMed
(This metric will help in zeroing in on stocks that have growth rates higher than the industry median. This is a meaningful indicator as decent earnings growth always adds to investor optimism.)
Zacks Rank = 1
(No screening is complete without our proven Zacks Rank, which has proved its worth since inception. It is a fundamental truth that stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy) have always managed to beat adversities and outperformed the market.)
Current Price >= 5
This parameter will help in screening stocks which are trading at a minimum price of $5 or higher.
Volume – 20 days (shares) >= 100000
Inclusion of this metric ensures that there is a substantial volume of shares that can be traded easily.
Here are five of the eleven stocks that made it through the screen:
FTI Consulting Inc. (FCN - Free Report) : Based in Baltimore, MD, and founded in 1982, FTI Consulting Inc. provides specialized consulting services across 26 foreign countries. This company holds a Zacks Rank #1 and has a strong four-quarter trailing surprise of 30.96%.
Fresh Del Monte Produce Inc. (FDP - Free Report) : This company and its subsidiaries are engaged in the production, marketing and distribution of fresh and fresh-cut fruit and vegetables across the globe. This company also sports a Zacks Rank #1.
Ryerson Holding Corporation (RYI - Free Report) : This company along with its subsidiaries is engaged in the processing and distribution of metals like stainless steel, aluminum, carbon steel, and alloy steels, as well as nickel and red metals. Sporting a Zacks Rank #1 (Strong Buy), the stock has an impressive four-quarter trailing surprise of 118.19%.
AEISAdvanced Energy Industries, Inc. (AEIS - Free Report) : This firm designs, manufactures, sells, and supports power conversion products and solutions that are extensively deployed by semiconductor, solar panel, and similar thin film manufacturers. This Zacks Rank #1 company has a decent long-term earnings growth potential of 12%.
Spark Energy, Inc. : This retail energy services company is engaged in the distribution of natural gas and electricity to residential, commercial, and industrial customers. This Zacks Rank #1 company has a stellar four-quarter trailing surprise of 780.42%.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »