Investors generally consider a stock's 52-week high a good criterion for an entry or exit point. 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 speculation is not absolutely baseless, not all stocks hitting a 52-week high are necessarily overpriced.

Investors might lose out on top gainers in an attempt to avoid the steep prices.

Stocks such as Kyndryl Holdings, Inc. (KD Quick QuoteKD - Free Report) , Comfort Systems USA (FIX Quick QuoteFIX - Free Report) , Phibro Animal Health (PAHC Quick QuotePAHC - Free Report) and Deutsche Bank (DB Quick QuoteDB - Free Report) are expected to maintain their momentum and keep scaling new highs. More information on a stock is necessary to determine whether 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 times, stocks that hit 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 this level. But that does not always indicate an impending decline. Factors such as robust sales, surging profit levels, earnings growth prospects and strategic acquisitions, which 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 underreaction 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 and 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 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 four picks out of the 11 stocks that made it through the screen:

Kyndryl Holdings operates as a holding company through its subsidiaries. It provides applications, data, AI, cloud, core enterprise, digital workplace, security and other related services. KD is benefiting from strong long-term trends in the technology sector, particularly the increasing demand for cloud and digital transformation services. The company is also seeing growth from Alliances, Advanced Delivery, and Accounts initiatives, as well as from Kyndryl Consult advisory services. Furthermore, Kyndryl is focused on improving profitability by shedding low-margin contracts and focusing on higher-margin services. 

The company offers data and AI services to help clients manage and leverage their data, including data modernization, platform management, and enterprise AI solutions. Kyndryl is also integrating AI into its own operations, notably through its Kyndryl Bridge platform, which uses AI to accelerate automation and enhance efficiency.

The Zacks Consensus Estimate for KD’s fiscal 2025 earnings has moved up by 0.5% to $2.18 per share in the past 30 days. It has a trailing four-quarter earnings surprise of 37.53%, on average.

Comfort Systems USA is a national provider of comprehensive heating, ventilation and air conditioning installation, maintenance, repair and replacement services. FIX continues to maintain a disciplined but active approach to acquisitions in 2025, supported by a strong balance sheet. In the first quarter of 2025, Comfort Systems acquired Century Contractors, a Charlotte-based mechanical contractor expected to contribute approximately $90 million in annual revenues. The company emphasized that while it is being selective, acquisitions remain a key part of its strategy, particularly in areas that strengthen end-market capabilities and deepen regional presence.

Comfort Systems continues to prioritize capital deployment toward high-conviction acquisitions and shareholder returns. The company expects continued support from solid project execution and had a record $6.9 billion backlog as of March 31, 2025. With a history of successful integrations and strong liquidity, Comfort Systems is well-positioned to pursue strategic acquisitions as market opportunities arise.

The Zacks Consensus Estimate for FIX’s 2025 earnings has remained steady at $19.28 per share in the past 30 days. The company surpassed the Zacks onsensus Estimate in each of the trailing four quarters, the average surprise being 17.57%.

Phibro Animal Health is a leading global diversified animal health and mineral nutrition company. The company provides a broad range of products for food animals, including poultry, swine, beef, dairy cattle and aquaculture.

Phibro’s leading MFA product franchise, Stafac/V-Max/Eskalin, is approved in more than 30 countries for use in poultry, swine, beef and dairy cattle and is regarded as one of the leading MFA products for production animals. Innovation also remains a strong focus area, leading to the development of new antigens and vaccines, such as the inactivated subunit Infectious Bursal Disease Virus and Egg Drop Syndrome vaccines. On top of that, the company heavily invests in expanding the vaccine manufacturing capacity at several locations, such as in Sligo, Ireland and Guarulhos, Brazil.

The Zacks Consensus Estimate for PAHC’s fiscal 2025 earnings has remained steady at $2.04 per share in the past 30 days. It has a trailing four-quarter earnings surprise of 30.62%, on average.

Deutsche Bank Aktiengesellschaft continues to benefit from a well-diversified and steadily expanding deposit base. Over the last three years ending 2024, deposits recorded a compound annual growth rate (CAGR) of 3.3%, reflecting stable inflows and client trust across both retail and corporate channels. As of March 31, 2025, total deposits were €665 billion, reflecting year-over-year growth. The stable deposit balance will strengthen the company’s balance sheet. The bank maintains a sound liquidity position, with a liquidity coverage ratio of 134% as of March 31, 2025. Its cash, central bank, and interbank balances totaled €159 billion, compared with only €15.1 billion in short-term borrowings. 

DB has embarked on a digital transformation drive, focusing on cloud migration, AI, and automation to enhance operational efficiency and client services. In May 2025, Deutsche Bank reinforced its strategic partnership with International Business Machines Corporation (IBM) through a new license agreement, gaining greater access to IBM’s advanced software solutions, including the watsonx AI portfolio, to streamline workflows, reduce costs and enhance client services.

The Zacks Consensus Estimate for DB’s 2025 earnings has moved north by 0.9% to $3.42 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in two of the trailing four quarters while missing the same twice, the average negative surprise being 66.85%.

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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/.