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Analyst Blog

The global market conditions continue to be volatile with the a plethora of issues ranging from the growing uncertainty regarding a Fed rate hike to the persistent oil price weakness making investors jittery. In such a scenario, picking the potential winning stocks and making a prudent investment decision for the best returns may seem to be an uphill task.

It is a well-established strategy among investors to buy a stock that has either hit or exceeded its 52-week high mark. Conversely, stocks that slip to or even below their 52-week low mark are often offloaded. More often than not, a stock scales the 52-week high mark on the back of some favorable development. In fact, this metric is often considered an indicator of profitable investment decisions.

However, the question that arises is what else investors should consider while picking stocks that have hit a 52-week high. As we know, growth stocks are mostly overvalued and are expected to generate substantial capital gains. These stocks have higher P/E ratio and mostly belong to industries displaying strong momentum. Therefore, investors should likely choose stocks that are fundamentally sound and here growth investing comes into play. Growth investors focus on stocks whose growth in earnings and/or revenues will translate into an increase in stock price.

Thus, it becomes difficult for investors to zero in on such stocks, as the right tools and metrics are necessary to select these stocks.

This is where our proven Zacks Rank system comes to the rescue. Using our proven methodology, investors can not only identify the attractive picks but also ascertain the industries which might turn out to be value accretive, going ahead.

In this scenario, the attractiveness of a stock as an investment option will be determined by its Growth Style Score of “A” (or “B”) and price as a percentage of 52-week high- low range, greater than 95%. Our research shows that stocks with Style Scores of “A” or “B” when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

Based on the above criteria, we have shortlisted five stocks sporting a Zacks Rank #1 having a Growth Score of “A” and price as a percentage of 52-week high-low range, greater than 95%.

Fremont, CA-based AXT Inc. (AXTI - Snapshot Report) designs, develops, manufactures and distributes compound and single element semiconductor substrates. Its price as a percentage of 52-week high-low range is 100.  

Rockville, MD-based Argan, Inc. (AGX - Snapshot Report) along with its subsidiaries, provides engineering, procurement, construction, commissioning, operations management, maintenance, development, and consulting services to the power generation and renewable energy markets. The price as a percentage of 52-week high-low range for this company is 99.11.   

Wilmington, DE-based The Chemours Company (CC - Snapshot Report) , provides performance chemicals in North America, the Asia Pacific, Europe, the Middle East, Africa, and Latin America. The price as a percentage of 52-week high-low range for this company is 99.11.    

Headquartered in San Leandro, CA, Energy Recovery, Inc. (ERII - Snapshot Report) provides energy solutions to industrial fluid flow markets worldwide. Its price as a percentage of 52-week high-low range is 97.61.  

Rutland, VT-based Casella Waste Systems Inc. (CWST - Snapshot Report) , along with its subsidiaries, operates as a vertically-integrated solid waste services company in the northeastern United States. The price as a percentage of 52-week high-low range for this company is 100.

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