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4 Stocks Trading Near 52-Week High That Can Climb Further
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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 Amkor Technology (AMKR - Free Report) , Tenet Healthcare Corp. (THC - Free Report) , Leidos (LDOS - Free Report) and Maximus (MMS - 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 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 under-reaction 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 0.11 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.
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 >= 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 of the nine that made it through the screen:
Amkor Technology is the world's largest independent semiconductor packaging and test services provider and a leader in advanced packaging technology development.
Amkor's growth potential stems from increasing chip complexity and demand for advanced packaging. The company is expanding capacity in strategic locations like Taiwan and Portugal. Its diverse customer base spans multiple semiconductor companies, reducing single-client dependency. Amkor serves growing sectors such as automotive electronics, 5G, IoT, and AI, potentially driving long-term demand.
The Zacks Consensus Estimate for AMKR’s 2024 earnings has remained steady at $1.78 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 44.29%.
Tenet Healthcare is a major investor-owned healthcare services company operating general hospitals and related facilities across multiple states, with key offices in California and Florida.
Tenet's revenue growth is driven by increasing patient admissions and strategic mergers and acquisitions. The company is optimizing operations through targeted divestitures of underperforming assets. Its Ambulatory Care unit is projected to generate $4.2-$4.3 billion in 2024 net operating revenues. Tenet's financial performance is further enhanced by contractual rate increases in its Conifer joint venture. This combination of organic growth, strategic acquisitions, operational optimization and strong performance in key business units positions Tenet Healthcare for continued success in the healthcare services sector.
The Zacks Consensus Estimate for THC’s 2024 earnings has moved north by 4.5% to $8.55 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 56.5%.
Leidos Holdings is a global science and technology leader serving defense, intelligence, civil, and health markets. Its core capabilities include cybersecurity, data analytics, enterprise IT modernization, operations and logistics, sensors, software development and systems engineering.
A primary revenue source for Leidos is contract wins from the Pentagon and U.S. allies for affordable military products. The company recently clinched a contract to offer the U.S. Air Force enterprise information technology (IT) and telecommunications support, including cybersecurity. The agreement is valued at $738 million. These contracts boost the company's bookings and backlog. As of March 2024, Leidos had a healthy backlog of $36.57 billion, up from $35.09 billion in the previous year. This strong backlog suggests promising revenue prospects for the upcoming quarters.
The Zacks Consensus Estimate for LDOS’s 2024 earnings has remained steady at $8.75 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 23.43%.
Maximus is a global operator of government health and human services programs, employing over 39,600 people across the United States, Australia, Canada, Saudi Arabia, Singapore, and the United Kingdom.
The company pursues an aggressive acquisition strategy to expand its business scope, deepen client relationships and enhance technical capabilities. These acquisitions complement Maximus' long-term organic growth initiatives by bringing in new expertise and processes. Maximus benefits from strong operational cash flows, supporting its growth strategies and financial stability. The company's consistent dividend payments have boosted investor confidence and positively impacted earnings per share. This multifaceted approach positions Maximus for sustained growth and value creation in its market sector.
The Zacks Consensus Estimate for MMS’s fiscal 2024 earnings has moved north by 1.8% to $5.79 per share in the past 30 days. The company beat the Zacks Consensus Estimate twice in the trailing four quarters while missing the same twice, the average negative surprise being 2.69%.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your trial to the Research Wizard today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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.
Image: Bigstock
4 Stocks Trading Near 52-Week High That Can Climb Further
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 Amkor Technology (AMKR - Free Report) , Tenet Healthcare Corp. (THC - Free Report) , Leidos (LDOS - Free Report) and Maximus (MMS - 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 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 under-reaction 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 0.11 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.
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 >= 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 of the nine that made it through the screen:
Amkor Technology is the world's largest independent semiconductor packaging and test services provider and a leader in advanced packaging technology development.
Amkor's growth potential stems from increasing chip complexity and demand for advanced packaging. The company is expanding capacity in strategic locations like Taiwan and Portugal. Its diverse customer base spans multiple semiconductor companies, reducing single-client dependency. Amkor serves growing sectors such as automotive electronics, 5G, IoT, and AI, potentially driving long-term demand.
The Zacks Consensus Estimate for AMKR’s 2024 earnings has remained steady at $1.78 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 44.29%.
Tenet Healthcare is a major investor-owned healthcare services company operating general hospitals and related facilities across multiple states, with key offices in California and Florida.
Tenet's revenue growth is driven by increasing patient admissions and strategic mergers and acquisitions. The company is optimizing operations through targeted divestitures of underperforming assets. Its Ambulatory Care unit is projected to generate $4.2-$4.3 billion in 2024 net operating revenues. Tenet's financial performance is further enhanced by contractual rate increases in its Conifer joint venture. This combination of organic growth, strategic acquisitions, operational optimization and strong performance in key business units positions Tenet Healthcare for continued success in the healthcare services sector.
The Zacks Consensus Estimate for THC’s 2024 earnings has moved north by 4.5% to $8.55 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 56.5%.
Leidos Holdings is a global science and technology leader serving defense, intelligence, civil, and health markets. Its core capabilities include cybersecurity, data analytics, enterprise IT modernization, operations and logistics, sensors, software development and systems engineering.
A primary revenue source for Leidos is contract wins from the Pentagon and U.S. allies for affordable military products. The company recently clinched a contract to offer the U.S. Air Force enterprise information technology (IT) and telecommunications support, including cybersecurity. The agreement is valued at $738 million. These contracts boost the company's bookings and backlog. As of March 2024, Leidos had a healthy backlog of $36.57 billion, up from $35.09 billion in the previous year. This strong backlog suggests promising revenue prospects for the upcoming quarters.
The Zacks Consensus Estimate for LDOS’s 2024 earnings has remained steady at $8.75 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 23.43%.
Maximus is a global operator of government health and human services programs, employing over 39,600 people across the United States, Australia, Canada, Saudi Arabia, Singapore, and the United Kingdom.
The company pursues an aggressive acquisition strategy to expand its business scope, deepen client relationships and enhance technical capabilities. These acquisitions complement Maximus' long-term organic growth initiatives by bringing in new expertise and processes. Maximus benefits from strong operational cash flows, supporting its growth strategies and financial stability. The company's consistent dividend payments have boosted investor confidence and positively impacted earnings per share. This multifaceted approach positions Maximus for sustained growth and value creation in its market sector.
The Zacks Consensus Estimate for MMS’s fiscal 2024 earnings has moved north by 1.8% to $5.79 per share in the past 30 days. The company beat the Zacks Consensus Estimate twice in the trailing four quarters while missing the same twice, the average negative surprise being 2.69%.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your trial to the Research Wizard today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
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