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3 Stocks Trading Near 52-Week High With More Upside Potential
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Investors generally consider a 52-week high a good criterion for determining an entry or exit point for a given stock. However, 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, 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 Hanesbrands (HBI - Free Report) , Sunoco (SUN - Free Report) and Portland General Electric (POR - Free Report) are expected to maintain their momentum and keep scaling new highs. More 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 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 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 >= .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
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 >= 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 three picks out of the 10 stocks that made it through the screen:
Hanesbrands is a global apparel company specializing in the design, manufacture, sourcing, and sale of essential clothing items for men, women and children. With a portfolio of well-known brands, including Hanes, Champion, Playtex, Bali, Just My Size, Barely There, and Wonderbra, the company has established a strong presence in both domestic and international markets. Their diverse product range caters to various consumer needs, solidifying their position in the apparel industry.
Despite projecting lower sales for 2024, Hanesbrands anticipates growth in operating profit and bottom-line performance, showcasing its resilience in a challenging economic environment. The company has strengthened its operational and financial models by enhancing capabilities in brand building, data analytics, inventory management and SKU discipline. These improvements, coupled with significant fixed-cost reductions and streamlined supply chains, have allowed Hanesbrands to restore its gross margins to historical levels, achieving an adjusted gross margin of 39.9% in the first quarter of 2024. Furthermore, the company’s strategic focus on bolstering the Innerwear business has yielded positive results, as evidenced by market share growth in the same quarter.
The Zacks Consensus Estimate for HBI’s 2024 earnings has remained steady at 46 cents 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 surprise being 10.23%.
Sunoco LP operates as a master limited partnership specializing in motor fuel distribution. The company serves a diverse customer base of approximately 10,000 clients, including independent dealers, commercial customers, convenience stores and distributors. This extensive network allows Sunoco to distribute over 10 fuel brands to convenience stores, creating a stable foundation for consistent cash flows.
The company's strategic positioning is further strengthened by its expansive operations spanning 40 states and the recent Brownsville terminal expansion, which enhances revenue diversification. Sunoco's business model is built on long-term stability, with 7-to-10-year fuel supply agreements maintaining a retention rate of more than 90%, ensuring predictable sales volumes and gross profit stability.
The acquisition of NuStar Energy's pipeline network has bolstered Sunoco's vertical integration and business diversification. The post-pandemic increase in gasoline and diesel consumption is driving demand for wholesale fuel distribution, potentially boosting distributable cash flows. With a competitive dividend yield of 6.13%, Sunoco presents an attractive option for investors seeking reliable returns in the energy sector.
The Zacks Consensus Estimate for SUN’s 2024 earnings has remained steady at $7.29 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 26.57%.
Portland General Electric is a vertically integrated electric utility with over a century of experience in power delivery, serving residential, commercial, and industrial customers in Oregon. The company generates electricity from a diverse mix of resources, including hydropower, coal and natural gas. In addition to its primary operations, POR actively participates in the wholesale market, engaging in the purchase and sale of electricity and natural gas to utilities and energy marketers.
The company’s commitment to continuous capital investments plays a crucial role in maintaining and enhancing its operational resilience. The company plans to invest $1.3 billion in 2024 and over $6 billion through 2028 to upgrade its distribution and transmission infrastructure, with a focus on grid modernization to withstand severe weather conditions and ensure uninterrupted electricity supply. These investments are designed to improve reliability, enhance customer experience, and provide environmental and cost-efficiency benefits.
Portland General Electric aims to transition completely to clean energy by 2040. The company's regulated electric operations in Oregon generate stable and growing income, with expectations of strong customer growth driven by robust demand from the semiconductor and data center sectors in its service area. The company projects a long-term load growth of approximately 2% per annum until 2027.
The Zacks Consensus Estimate for POR’s 2024 earnings has moved up by a penny to $3.09 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 4.44%.
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 Research Wizard trial 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
3 Stocks Trading Near 52-Week High With More Upside Potential
Investors generally consider a 52-week high a good criterion for determining an entry or exit point for a given stock. However, 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, 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 Hanesbrands (HBI - Free Report) , Sunoco (SUN - Free Report) and Portland General Electric (POR - Free Report) are expected to maintain their momentum and keep scaling new highs. More 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 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 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 >= .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
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 >= 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 three picks out of the 10 stocks that made it through the screen:
Hanesbrands is a global apparel company specializing in the design, manufacture, sourcing, and sale of essential clothing items for men, women and children. With a portfolio of well-known brands, including Hanes, Champion, Playtex, Bali, Just My Size, Barely There, and Wonderbra, the company has established a strong presence in both domestic and international markets. Their diverse product range caters to various consumer needs, solidifying their position in the apparel industry.
Despite projecting lower sales for 2024, Hanesbrands anticipates growth in operating profit and bottom-line performance, showcasing its resilience in a challenging economic environment. The company has strengthened its operational and financial models by enhancing capabilities in brand building, data analytics, inventory management and SKU discipline. These improvements, coupled with significant fixed-cost reductions and streamlined supply chains, have allowed Hanesbrands to restore its gross margins to historical levels, achieving an adjusted gross margin of 39.9% in the first quarter of 2024. Furthermore, the company’s strategic focus on bolstering the Innerwear business has yielded positive results, as evidenced by market share growth in the same quarter.
The Zacks Consensus Estimate for HBI’s 2024 earnings has remained steady at 46 cents 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 surprise being 10.23%.
Sunoco LP operates as a master limited partnership specializing in motor fuel distribution. The company serves a diverse customer base of approximately 10,000 clients, including independent dealers, commercial customers, convenience stores and distributors. This extensive network allows Sunoco to distribute over 10 fuel brands to convenience stores, creating a stable foundation for consistent cash flows.
The company's strategic positioning is further strengthened by its expansive operations spanning 40 states and the recent Brownsville terminal expansion, which enhances revenue diversification. Sunoco's business model is built on long-term stability, with 7-to-10-year fuel supply agreements maintaining a retention rate of more than 90%, ensuring predictable sales volumes and gross profit stability.
The acquisition of NuStar Energy's pipeline network has bolstered Sunoco's vertical integration and business diversification. The post-pandemic increase in gasoline and diesel consumption is driving demand for wholesale fuel distribution, potentially boosting distributable cash flows. With a competitive dividend yield of 6.13%, Sunoco presents an attractive option for investors seeking reliable returns in the energy sector.
The Zacks Consensus Estimate for SUN’s 2024 earnings has remained steady at $7.29 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 26.57%.
Portland General Electric is a vertically integrated electric utility with over a century of experience in power delivery, serving residential, commercial, and industrial customers in Oregon. The company generates electricity from a diverse mix of resources, including hydropower, coal and natural gas. In addition to its primary operations, POR actively participates in the wholesale market, engaging in the purchase and sale of electricity and natural gas to utilities and energy marketers.
The company’s commitment to continuous capital investments plays a crucial role in maintaining and enhancing its operational resilience. The company plans to invest $1.3 billion in 2024 and over $6 billion through 2028 to upgrade its distribution and transmission infrastructure, with a focus on grid modernization to withstand severe weather conditions and ensure uninterrupted electricity supply. These investments are designed to improve reliability, enhance customer experience, and provide environmental and cost-efficiency benefits.
Portland General Electric aims to transition completely to clean energy by 2040. The company's regulated electric operations in Oregon generate stable and growing income, with expectations of strong customer growth driven by robust demand from the semiconductor and data center sectors in its service area. The company projects a long-term load growth of approximately 2% per annum until 2027.
The Zacks Consensus Estimate for POR’s 2024 earnings has moved up by a penny to $3.09 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 4.44%.
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 Research Wizard trial 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/.