Stocks hitting their 52-week high and delivering consistent performance offer attractive opportunities to investors while building a portfolio. This is because stocks near that level are perceived to be winners. However, stocks touching a new 52-week high 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 speculations are not absolutely baseless, all stocks hitting a 52-week high are not necessarily overpriced.

In fact, investors might lose out on top gainers in an attempt to avoid the steep prices.
 
Stocks such as Flex (FLEX Quick QuoteFLEX - Free Report) , CommScope (COMM Quick QuoteCOMM - Free Report) , LendingTree (TREE Quick QuoteTREE - Free Report) and Astronics (ATRO Quick QuoteATRO - Free Report) are expected to maintain their momentum and keep scaling new highs. Extensive information on a stock is necessary to understand whether or not there is scope for further upside.

Here, we discuss a strategy to find the right stocks. The strategy borrows from the basics of momentum investing. This technique 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.

In fact, overvaluation is natural for most of these stocks as investors’ focus (or willingness to pay a premium) has helped them reach the level. But that does not always indicate an impending decline. Factors such as robust sales, surging profit levels, earnings growth prospects and strategic acquisitions that encourage 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 as well as sales, ensuring the continuation of their rally for some time.

Current Price/52 Week High >= .8: 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 that 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 <=2: 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) or #2 (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 >= 8: This parameter will help screen stocks that are trading at $8 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 four stocks, each sporting a Zacks Rank #1, out of the 17 that made it through the screen:

Flex is gaining from strong data center growth in both the cloud and power end markets, despite a complex macroeconomic environment. Flex remains on track to generate approximately $6.5 billion in revenues from data centers, reflecting year-over-year growth of at least 35% and accounting for 25% of its total revenues.  The company’s diversified portfolio, spanning multiple industries—from cloud infrastructure and AI data centers to automotive and healthcare—continues to be a key strength. With 4% revenue growth in the first half of fiscal 2026 and stronger demand expected in Power and Cloud in the fiscal fourth quarter, Flex has revised its fiscal 2026 revenue guidance to $26.7-$27.3 billion, up $500 million from the prior midpoint. It expects an adjusted operating margin of 6.2% to 6.3%, reflecting consistent performance above 6%. Flex now expects adjusted EPS in the range of $3.09 to $3.17, with the midpoint up by 17 cents per share.

The Zacks Consensus Estimate for FLEX’s fiscal 2026 earnings has moved north by 5.4% to $3.15 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 11.43%.

CommScope is developing solutions designed to support wireline and wireless network convergence, which are essential for the success of 5G technology. CommScope has an established global manufacturing and distribution footprint with strategically located manufacturing hubs that optimize product delivery timelines. The company recently announced the worldwide availability of SYSTIMAX Constellation edge-based power and connectivity platform. The solution effectively facilitates the deployment of 10G or higher speed fault-managed power networks with reduced cost, space and labor requirements. COMM also joined forces with Nokia to combine its FLX ODN non-hardened connectorized terminals with Nokia’s Broadband Easy digital automation platform to streamline the fiber deployment process in the Asia Pacific region. It is also collaborating with Comcast to roll out DOCSIS 4.0 amplifiers. CommScope’s growing partner base and strategic collaboration with industry leaders are driving innovation and boosting commercial prospects.

The Zacks Consensus Estimate for COMM’s 2025 earnings has moved north by 27.1% to $1.64 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 143.98%.

LendingTree is a key player in the growing digital lending space. It is an online marketplace that connects consumers with financial service providers for mortgages, loans, credit cards and insurance. The company’s operating strategy has been evolving, with a notable shift in focus toward boosting the top line by diversifying into non-mortgage products, particularly in the consumer segment. The company’s initiatives, including SPRING (previously MyLendingTree) and TreeQual, are bolstering its cross-selling opportunities. Further, LendingTree has been leveraging data and technology to augment user experience and monetization. The company’s strategic investment in EarnUp (in early 2022), a consumer-facing payments platform, demonstrates its commitment to building a more comprehensive, tech-enabled ecosystem for financial health management.

The Zacks Consensus Estimate for TREE’s 2025 earnings has moved north by 10.9% to $4.79 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 75.5%.

Astronics has been gaining momentum as global defense and commercial aerospace activity continues to expand. Higher commercial transport sales, backed by increased demand for cabin power and in-flight entertainment as well as connectivity products from the airlines, as a result of rapidly growing global commercial air traffic, are likely to bolster ATRO’s Aerospace business segment’s sales in the near term. 

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 heightened demand for advanced cabin power systems and in-flight entertainment and connectivity solutions.

The Zacks Consensus Estimate for ATRO’s 2025 earnings has moved north by 3.1% 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 59.1%.

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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