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 Macy's (M Quick QuoteM - Free Report) , Phibro Animal Health (PAHC Quick QuotePAHC - Free Report) , Western Digital (WDC Quick QuoteWDC - Free Report) and Astronics (ATRO Quick QuoteATRO - 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 are no tangible negatives. 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: This 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:

Macy’s is in the process of a complete makeover and has outlined plans under its three-year Bold New Chapter program to better adapt to the evolving retail ecosystem. Notably, the company is banking on Backstage locations, Vendor Direct, Store Pickup and Loyalty Program. The department store chain is investing in areas where it has a strong foothold, and these include dresses, fine jewelry, fragrances, men’s tailored, women's shoes and beauty.

The company’s transformation under the Bold New Chapter strategy gained significant traction, with the Reimagine 125 initiative delivering consistent outperformance. Digital initiatives continue to be a key pillar of Macy’s growth strategy. Management expects SG&A to decline in low single digits in the fiscal third quarter and in low- to mid-single digits in the fourth quarter. Also, a solid cash position, reduced net debt and active share repurchases support Macy’s ability to fund growth while delivering value to shareholders. 

The Zacks Consensus Estimate for M’s fiscal 2025 earnings has moved north by 5.9% to $1.96 per share in the past 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 25.84%.

Phibro is benefiting from strong momentum in its Animal Health business. Key products, including MFAs (medicated feed additives) and nutritional specialty products, facilitate enhanced animal nutrition, while Phibro’s nutritional offerings, such as OmniGen-AF and Animate, continue to gain traction in the global dairy industry. The acquisition of Zoetis’ MFA portfolio and certain water-soluble products added more than 37 established product lines sold across 80 countries, along with six manufacturing sites in the United States, Italy and China. 

In addition, Phibro is heavily investing in expanding vaccine manufacturing capacity at several locations. It recently began operations at a new vaccine production facility in Guarulhos, Brazil, that manufactures and markets autogenous vaccines against animal diseases for swine, poultry and aquaculture. Moreover, the company has been experiencing recovery within the Mineral Nutrition and Performance Products businesses. 

The Zacks Consensus Estimate for PAHC’s fiscal 2026 earnings has moved north by 10% to $2.53 per share in the past 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 27.88%.

Western Digital designs, manufactures and markets HDDs across external, client and data center segments. After spinning off its Flash/SSD business into SanDisk in 2025, WDC has transitioned into a focused, pure-play HDD company. The separation has strengthened its margins, cash flow and overall financial position. Rising nearline storage demand, expanding AI-driven data storage needs and improving HDD ASPs are expected to serve as major growth drivers.

The company’s ePMR and UltraSMR technologies deliver enhanced reliability, scalability and a low total cost of ownership (TCO). Meanwhile, its next-generation HAMR drives, which are currently undergoing early hyperscale testing, are on track for qualification in 2027. The upcoming ePMR drives are expected to qualify by early 2026, ensuring a seamless product transition. Management expects sustained revenue growth and improved profitability in the coming quarter, driven by increasing demand for high-capacity HDDs.

The Zacks Consensus Estimate for WDC’s fiscal 2026 earnings has moved north by 1.8% to $6.62 per share in the past 30 days. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.77%.

Astronics has been gaining momentum as global defense and commercial aerospace activity continues to expand. In the second quarter of 2025, its Aerospace unit’s sales reached a record $193.6 million, nearly 9% higher than last year, driven by growth in both commercial transport market sales and military aircraft sales. The company recently acquired Bühler Motor Aviation, a German aircraft seat actuation specialist. The deal enhances Astronics' engineering and product portfolio with $22 million in anticipated annual revenues next year, strengthening its commitment to provide best-in-class motion control for commercial aerospace industry players.

Looking ahead, as airlines expand their fleets and enhance passenger experiences in response to the rapidly growing air travel demand worldwide, there is a heightened demand for advanced cabin power systems and in-flight entertainment and connectivity solutions. This should bode well for Astronics, which is already capitalizing on this trend, as evident from the 13.4% year-over-year increase in its second-quarter 2025 Commercial Transport sales.

The Zacks Consensus Estimate for ATRO’s 2025 earnings has moved north by 1.8% to $1.65 per share in the past 30 days. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 78.54%.

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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/.