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With Donald Trump taking office in a few days, it is only wise to prepare an infallible list of stocks that can help you brave the odds ahead. This might seem to be a daunting task as the growing presence of high-valued stocks has made the market extremely overvalued. In such a scenario, it may be naïve to assume that these value stocks will pick up steam anytime soon.
Rather, it may feel prudent to stack up on great momentum stocks.A particular strategy advises investors to gamble on stocks that have scaled 52-week highs. This is fairly a new approach in the investing rulebook. Borrowing from the basics of Momentum investing, this technique bets on the principle of buying high and selling higher.
Though skeptics may raise a brow on the mettle of this 52-week high investment strategy, we believe that this, when clubbed with the right set of parameters, will help rack up sizable gains. A wide group of investors today favor winning stocks with prospects of scaling higher. These investors have mastered the art of finding stocks that have strong upside potential and are still undervalued.
Our screener helps in selecting the right filters which when combined with the 52-week high criteria will ensure handsome gains.
How Does it Work?
Stocks near 52-week highs often instill the presumptive “adjustment and anchoring bias” in the minds of investors. This principle works on the belief that investors use the 52-week high price as a reference point and value stocks against this anchor.
Many a times, such stocks are prevented from scaling higher despite robust potential due to the psychological bias of investors who fear that the stocks are overvalued and a price crash is impending.
A few of the stocks remain undervalued due to prolonged under reaction on part of investors despite bullish growth drivers. Meanwhile, news pertaining to robust sales, surging profit levels, bullish earnings prospects and strategic acquisitions can drive the stock higher.
However, when a string of positive developments start dominating the market, investors find their under-reaction unwarranted and the renewed interest might drive stocks beyond the 52-week high bar. Wall Street’s fast paced trading makes it imperative for investors to step in before the market gets a whiff of it.
Meanwhile, market gurus believe that the current price level rather than past changes in prices better reflect a stock’s momentum. This implies that if a stock is trading close to its 52-week high range, chances are that it will perform better in the subsequent period.
Parameters to Rely On
Our diligent screening technique has been deployed to find 52-week high stocks that hold tremendous potential compared to their respective industries. The added parameters are strong earnings growth expectations, sturdy value metrics and positive price momentum.
These stocks are relatively undervalued compared to their peers, in terms of earnings as well as sales, which make us believe that they will continue their rally for quite some time.
Current Price/52 Week High >= .80
This simply 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 and is likely to touch the 52-week high mark soon.
% 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
Lower the ratio, 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 their peers.
One-Year EPS Growth F(1)/F(0) >= XIndMed
This metric helps choose stocks that have higher growth rates than the industry median. This is a meaningful indicator as decent earnings growth adds to investor optimism.
Zacks Rank =1
No screening is complete without our Zacks Rank, which has proved its worth since inception. Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have always managed to brave adversities and beat the market. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price >= 5
This parameter will help screen stocks which are trading at $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 15 stocks that made it through the screen:
Coherent Inc. R) designs, manufactures, and supplies electro-optical systems and medical instruments utilizing laser, precision optic and microelectronic technologies. The company beat estimates in all of the trailing four quarters, at an average of 10.0%.
Headquartered in Santa Clara, CA, Applied Materials (AMAT - Free Report) is engaged in developing, manufacturing and marketing semiconductor wafer fabrication equipment and related spare parts for the semiconductor industry. The company has an average positive surprise of 4.5% for the trailing four quarters.
ABB Ltd. , headquartered in Zurich, Switzerland, is a leading power and automation technology company, offering a wide range of products systems, solutions and services that are designed to boost industrial productivity, power-grid reliability as well as energy efficiency. The company beat estimates in all of the trailing four quarters, at an average of 23.5%.
Premier, Inc. (PINC - Free Report) operates as a healthcare alliance. The company brings together hospitals, health systems, physicians and other healthcare providers primarily in the U.S. The company beat earnings estimates thrice in the trailing four quarters.
Teck Resources Limited (TECK - Free Report) is a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. With a total of three beats over the trailing four quarters, Tack Resources has an average positive earnings surprise of 105.1%.
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 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.
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 »
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
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5 High-Flying Stocks that Can Scale Higher
With Donald Trump taking office in a few days, it is only wise to prepare an infallible list of stocks that can help you brave the odds ahead. This might seem to be a daunting task as the growing presence of high-valued stocks has made the market extremely overvalued. In such a scenario, it may be naïve to assume that these value stocks will pick up steam anytime soon.
Rather, it may feel prudent to stack up on great momentum stocks.A particular strategy advises investors to gamble on stocks that have scaled 52-week highs. This is fairly a new approach in the investing rulebook. Borrowing from the basics of Momentum investing, this technique bets on the principle of buying high and selling higher.
Though skeptics may raise a brow on the mettle of this 52-week high investment strategy, we believe that this, when clubbed with the right set of parameters, will help rack up sizable gains. A wide group of investors today favor winning stocks with prospects of scaling higher. These investors have mastered the art of finding stocks that have strong upside potential and are still undervalued.
Our screener helps in selecting the right filters which when combined with the 52-week high criteria will ensure handsome gains.
How Does it Work?
Stocks near 52-week highs often instill the presumptive “adjustment and anchoring bias” in the minds of investors. This principle works on the belief that investors use the 52-week high price as a reference point and value stocks against this anchor.
Many a times, such stocks are prevented from scaling higher despite robust potential due to the psychological bias of investors who fear that the stocks are overvalued and a price crash is impending.
A few of the stocks remain undervalued due to prolonged under reaction on part of investors despite bullish growth drivers. Meanwhile, news pertaining to robust sales, surging profit levels, bullish earnings prospects and strategic acquisitions can drive the stock higher.
However, when a string of positive developments start dominating the market, investors find their under-reaction unwarranted and the renewed interest might drive stocks beyond the 52-week high bar. Wall Street’s fast paced trading makes it imperative for investors to step in before the market gets a whiff of it.
Meanwhile, market gurus believe that the current price level rather than past changes in prices better reflect a stock’s momentum. This implies that if a stock is trading close to its 52-week high range, chances are that it will perform better in the subsequent period.
Parameters to Rely On
Our diligent screening technique has been deployed to find 52-week high stocks that hold tremendous potential compared to their respective industries. The added parameters are strong earnings growth expectations, sturdy value metrics and positive price momentum.
These stocks are relatively undervalued compared to their peers, in terms of earnings as well as sales, which make us believe that they will continue their rally for quite some time.
Current Price/52 Week High >= .80
This simply 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 and is likely to touch the 52-week high mark soon.
% 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
Lower the ratio, 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 their peers.
One-Year EPS Growth F(1)/F(0) >= XIndMed
This metric helps choose stocks that have higher growth rates than the industry median. This is a meaningful indicator as decent earnings growth adds to investor optimism.
Zacks Rank =1
No screening is complete without our Zacks Rank, which has proved its worth since inception. Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have always managed to brave adversities and beat the market. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price >= 5
This parameter will help screen stocks which are trading at $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 15 stocks that made it through the screen:
Coherent Inc. R) designs, manufactures, and supplies electro-optical systems and medical instruments utilizing laser, precision optic and microelectronic technologies. The company beat estimates in all of the trailing four quarters, at an average of 10.0%.
Headquartered in Santa Clara, CA, Applied Materials (AMAT - Free Report) is engaged in developing, manufacturing and marketing semiconductor wafer fabrication equipment and related spare parts for the semiconductor industry. The company has an average positive surprise of 4.5% for the trailing four quarters.
ABB Ltd. , headquartered in Zurich, Switzerland, is a leading power and automation technology company, offering a wide range of products systems, solutions and services that are designed to boost industrial productivity, power-grid reliability as well as energy efficiency. The company beat estimates in all of the trailing four quarters, at an average of 23.5%.
Premier, Inc. (PINC - Free Report) operates as a healthcare alliance. The company brings together hospitals, health systems, physicians and other healthcare providers primarily in the U.S. The company beat earnings estimates thrice in the trailing four quarters.
Teck Resources Limited (TECK - Free Report) is a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. With a total of three beats over the trailing four quarters, Tack Resources has an average positive earnings surprise of 105.1%.
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 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.
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 »