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. 

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 Hewlett Packard (HPE Quick QuoteHPE - Free Report) , Arrow Electronics (ARW Quick QuoteARW - Free Report) , Kohl's (KSS Quick QuoteKSS - Free Report) and GigaCloud Technology Inc. (GCT Quick QuoteGCT - 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 (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 >= 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 21 stocks, each carrying a Zacks Rank #1, that made it through the screen:

Hewlett Packard Enterprise is well-positioned to capitalize on accelerating enterprise AI demand. On its Networking Investor Day on Sept. 30, 2026, HPE raised its fiscal 2027 networking revenue growth outlook to high-teens to low-20s percent, with operating margins targeted in the mid-to-high 20s percent range. Data Center Networking is guided to grow at a low-to-high 50% CAGR through fiscal 2029. 

HPE also lifted its Juniper Networks cost synergy target to $800 million in annual run-rate savings by fiscal 2028, up from $600 million. A $1.2 billion AMD Helios AI Rack order from Vultr validates HPE’s integrated AI strategy. The October 2026 ProLiant Gen13 launch and deepened NVIDIA collaboration for enterprise agentic AI further support a constructive near-term outlook.

The Zacks Consensus Estimate for the company’s fiscal 2027 earnings has remained steady at $3.81 per share in the past 30 days. HPE’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 19.6%.

Arrow Electronics is well-positioned for near-term gains, supported by robust guidance and key September 2026 catalysts. For third-quarter 2026, management guided consolidated sales of $9.60 billion to $10.20 billion, with Global Components projected to grow 35% to 42% year over year. Book-to-bill ratios remain well above parity, and the backlog continues to expand.

In September, Arrow secured distribution rights for the complete HPE Networking portfolio—HPE Aruba and Juniper Networking—across North America and select EMEA, expanding revenues in AI, hybrid cloud, and data center modernization. Arrow increased its North American asset securitization facility from $1.5 billion to $1.75 billion and extended its maturity to September 2029. Deidra Merriwether’s appointment as president and COO on Sept. 8 reinforced ARW’s near-term growth momentum.

The Zacks Consensus Estimate for the company’s 2026 earnings has remained steady at $21.24 per share in the past 30 days. ARW surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 34.4%.

Kohl’s is positioned for near-term improvement, supported by raised full-year guidance and balance sheet progress. Management lifted its adjusted EPS outlook to $1.80–$2.40 and raised the adjusted operating margin guidance to 3.5%–4.0%. Gross margin expanded 305 basis points in the second quarter, while SG&A expenses continued to decline. Long-term debt was reduced by $195 million, enabling Kohl’s to restart share repurchases of up to $100 million. 

The September 2026 Babies"R"Us expansion to 56 additional stores — featuring an exclusive collection and new brand additions, including Millie Moon diapers and Hallmark gift sets — deepens the family-focused assortment ahead of the critical holiday season. A Deal Days event in early October signals proactive promotional momentum to drive traffic and conversion through year-end.

The Zacks Consensus Estimate for the company’s 2026 earnings has remained steady at $2.10 per share in the past 30 days. KSS’ earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 84.76%.

GigaCloud Technology’s near-term setup looks constructive. Management guides third-quarter 2026 revenues of $375-$400 million, signaling continued demand across its B2B marketplace for large parcel merchandise. Expanding participation should support that outlook. Active third-party sellers reached 1,465 and active buyers 12,823 over the trailing 12 months, while third-party GMV, at $962.3 million, now makes up 55.2% of marketplace GMV, a mix supporting scalable growth. 

Capital allocation adds support. The board approved a new three-year, $120 million repurchase program in August, and GigaCloud deployed roughly $18 million on buybacks after June 30. With $378.6 million in cash, restricted cash and investments as of June 30, the company retains flexibility to invest in growth while returning capital, positioning shares for a steadier trajectory.

The Zacks Consensus Estimate for the company’s 2026 earnings has moved 17.7% north to $4.92 per share in the past 30 days. GCT surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 42.08%.