Stocks hitting their 52-week high and delivering consistent performances 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. 

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.

Investors might lose out on top gainers in an attempt to avoid the steep prices.
 
Stocks such as Murphy USA (MUSA Quick QuoteMUSA - Free Report) , DaVita (DVA Quick QuoteDVA - Free Report) , Microchip Technology (MCHP Quick QuoteMCHP - Free Report) and Cenovus Energy (CVE Quick QuoteCVE - 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 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.

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 >= .11: 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 0.11 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.

1-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 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 our four picks out of the 29 stocks, each carrying a Zacks Rank #1, that made it through the screen:

Murphy USA presents a near-term fundamental case. First-quarter 2026 results showed net income of $136.3 million ($7.28 per diluted share) compared with $53.2 million in the year-ago quarter. Total fuel contribution jumped to 35.0 cpg from 25.4 cpg due to market volatility and fuel supply strength. Merchandise contribution grew 7.3% to $210.2 million on unit margins of 20.0%. April all-in margins are tracking 35–40 cpg with volumes roughly flat year-over-year. Full-year 2026 guidance targets merchandise contribution of $890–$900 million and Adjusted EBITDA of approximately $1 billion. With 28 stores under construction and 45–55 new openings planned, organic growth supports earnings expansion. In May 2026, the board raised the quarterly dividend to 64 cents per share; a $2 billion repurchase authorization reinforces shareholder returns.

The Zacks Consensus Estimate for the company’s 2026 earnings has moved 26.5% north to $31.48 per share in the past 60 days. MUSA surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 16.56%.

DaVita enters the near term with strengthened fundamentals following first-quarter 2026 results. Revenues reached $3.42 billion, up approximately 6% year over year, driven by improved treatment volumes, a 4% rise in revenue per treatment, and lower patient care costs. Adjusted operating income of $482 million came in $50 million ahead of plan. Management raised full-year adjusted operating income guidance to $2.15–$2.25 billion and adjusted EPS guidance to $14.10–$15.20. The Integrated Kidney Care segment recorded record aggregate CKCC program savings, reflecting a 4.5% gross savings rate improvement. Volume gains are further supported by patient transfers from competitor clinic closures. Deployment of AI-driven staffing tools and sustained labor efficiencies underpin the company's 2.6% five-year cost CAGR target, reinforcing near-term operational momentum.

The Zacks Consensus Estimate for the company’s 2026 earnings has moved 6.4% north to $15.07 per share in the past 60 days. DVA’s earnings surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same once, the average surprise being 2.4%.

Microchip Technology's near-term fundamentals reflect a well-grounded recovery. Fourth-quarter fiscal 2026 net sales of $1.311 billion exceeded the guidance midpoint, rising 35.1% year over year and 10.6% sequentially. Non-GAAP EPS of 57 cents beat the guided 48–52 cents range. Distributor inventory fell to 26 days, near the low end of historical norms, enabling higher factory utilization and margin expansion ahead. For the first quarter of fiscal 2027, the company guided net sales of $1.442–$1.469 billion — up 11% sequentially — with non-GAAP EPS of 67–71 cents and non-GAAP gross margin of 62.25%–63.25%. April 2026 product launches, including post-quantum cryptography root of trust controllers and expanded CLB-based MCUs, deepen Microchip's addressable footprint in data center, defense, and industrial markets. A quarterly dividend of 45.5 cents per share underscores financial discipline.

The Zacks Consensus Estimate for the company’s 2026 earnings has moved 18% north to $3.02 per share in the past 60 days. MCHP surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 8.72%.

Cenovus Energy presents a near-term fundamental case grounded in production strength and robust cash generation. First-quarter 2026 upstream production reached a record 972,100 BOE/d, up 19% year over year, with free funds flow of $2.2 billion. Downstream operations delivered a 97% crude unit utilization rate and U.S. Refining adjusted market capture of 114%. The board raised the quarterly base dividend 10% to 22 cents per share beginning the second quarter of 2026, with $1.0 billion returned to shareholders in the first quarter. Key catalysts include West White Rose’s first oil targeted for the third quarter of 2026, Christina Lake North's 40-well redevelopment ramping through H2 2026, and Sunrise progressing toward 70,000 bbls/d by 2028. A $275 million commercial fuels divestiture supports progress toward the $4 billion long-term net debt target.

The Zacks Consensus Estimate for the company’s 2026 earnings has increased by 166.4% to $3.01 per share in the past 60 days. CVE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 50.8%.