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High Tide Inc. (HITI) Soars to 52-Week High, Time to Cash Out?

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Have you been paying attention to shares of High Tide Inc. (HITI - Free Report) ? Shares have been on the move with the stock up 55.8% over the past month. The stock hit a new 52-week high of $2.69 in the previous session. High Tide Inc. has gained 60.1% since the start of the year compared to the 5.9% move for the Zacks Medical sector and the 5.9% return for the Zacks Medical - Products industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on March 15, 2024, High Tide reported EPS of $0 versus consensus estimate of $-0.03 while it beat the consensus revenue estimate by 0.36%.

For the current fiscal year, High Tide is expected to post earnings of $0 per share on $387.47 million in revenues. This represents a 100% change in EPS on a 7.16% change in revenues. For the next fiscal year, the company is expected to earn $0.14 per share on $451.86 million in revenues.

Valuation Metrics

High Tide may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

High Tide has a Value Score of B. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 783X current fiscal year EPS estimates, which is a premium to the peer industry average of 21.8X. On a trailing cash flow basis, the stock currently trades at 10.1X versus its peer group's average of 11X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, High Tide currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if High Tide passes the test. Thus, it seems as though High Tide shares could have potential in the weeks and months to come.

How Does HITI Stack Up to the Competition?

Shares of HITI have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is PetIQ, Inc. (PETQ - Free Report) . PETQ has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of D.

Earnings were strong last quarter. PetIQ, Inc. beat our consensus estimate by 58.62%, and for the current fiscal year, PETQ is expected to post earnings of $1.26 per share on revenue of $1.15 billion.

Shares of PetIQ, Inc. have gained 15.6% over the past month, and currently trade at a forward P/E of 14.82X and a P/CF of 6.97X.

The Medical - Products industry is in the top 37% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HITI and PETQ, even beyond their own solid fundamental situation.

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