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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 Universal Health Services (UHS - Free Report) , Tenet Healthcare Corp. (THC - Free Report) , Century Communities (CCS - Free Report) and Magnite (MGNI - 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 11 that made it through the screen:
Universal Health Services owns and operates (through its subsidiaries) acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers and radiation oncology centers.
Universal Health's Acute Care and Behavioral Health segments have been pivotal in driving top-line growth, fueled by expansions in licensed bed capacity. The company anticipates positive impacts on its Acute Care unit from Medicaid supplemental programs.
Strategic buyouts have played a significant role in augmenting its growth trajectory by broadening its portfolio of facilities. It beat second-quarter earnings estimates on Acute Care strength. The company maintains a robust liquidity position, enabling it to pursue growth initiatives and distribute capital through buybacks and dividends. It has resorted to a constant dividend payout of 20 cents per share since 2019.
The Zacks Consensus Estimate for UHS’ 2024 earnings has moved north by 9.2% to $15.03 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 14.58%.
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 fueled by increasing patient admissions, while its strategy of acquisitions and alliances aims to expand the scale of its business through inorganic growth. It has been undertaking divestitures to eliminate unprofitable businesses and focus on allocating capital to higher return-generating investments. Its performance in Ambulatory Care is driving the results.
Net operating revenues for the Ambulatory Care unit are likely to be between $4.325-$4.475 billion in 2024. 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 16.8% to $10.21 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 58.48%.
Century Communities is a home building and construction company. Its activities comprise land acquisition, development and entitlements, and the acquisition, development, construction, marketing, and sale of various single-family detached and attached residential home projects.
The company’s initiative of offering affordable homes along with several incentive offerings, including lot premiums, interest rate buydowns and discounts on base home prices, is expected to be a tailwind. Also, its focus on building homes on a spec basis bodes well. This initiative of the company helps in direct cost control, sparks the availability of quick move-ins and assures buyers of financing certainty.
Furthermore, despite the improving inventory of existing home sales, the company is likely to benefit from increasing new home contracts, thanks to its improved cycle times and increased level of home starts. The company’s focus on affordability, along with the reduced cycle times and cost-reduction initiatives, positions it well for the rest of 2024.
The Zacks Consensus Estimate for 2024 earnings has moved north by 3.1% to $10.43 per share in the past 30 days. CCS surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 35.57%.
Magnite provides sell-side advertising platform. The company's omnichannel advertising platform enables publishers to monetize across all auction types and formats, including CTV, desktop display, video, audio and mobile.
Magnite intends to continuously invest in providing seamless services to its clients from different domains. The combination of SpringServe and Magnite streaming SSP offers a complete solution that includes ad serving, yield monetization, audience capabilities and a host of tools to protect the consumer viewing experience and honor complex rules of competitive separation and frequency capping.
ClearLine, the company’s self-service direct buying platform, is continuing to gain traction with numerous agencies and multiple brands testing and transacting through it. Contributions from a robust partner base, including the likes of Sling, Hulu, Pluto, Tubi, Discovery and Fox, and device manufacturing companies like Roku and Samsung, are expected to have contributed to MGNI’s revenues in the upcoming quarters.
The Zacks Consensus Estimate for MGNI’s 2024 earnings has remained steady at 82 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 252.78%.
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 Universal Health Services (UHS - Free Report) , Tenet Healthcare Corp. (THC - Free Report) , Century Communities (CCS - Free Report) and Magnite (MGNI - 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 11 that made it through the screen:
Universal Health Services owns and operates (through its subsidiaries) acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers and radiation oncology centers.
Universal Health's Acute Care and Behavioral Health segments have been pivotal in driving top-line growth, fueled by expansions in licensed bed capacity. The company anticipates positive impacts on its Acute Care unit from Medicaid supplemental programs.
Strategic buyouts have played a significant role in augmenting its growth trajectory by broadening its portfolio of facilities. It beat second-quarter earnings estimates on Acute Care strength. The company maintains a robust liquidity position, enabling it to pursue growth initiatives and distribute capital through buybacks and dividends. It has resorted to a constant dividend payout of 20 cents per share since 2019.
The Zacks Consensus Estimate for UHS’ 2024 earnings has moved north by 9.2% to $15.03 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 14.58%.
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 fueled by increasing patient admissions, while its strategy of acquisitions and alliances aims to expand the scale of its business through inorganic growth. It has been undertaking divestitures to eliminate unprofitable businesses and focus on allocating capital to higher return-generating investments. Its performance in Ambulatory Care is driving the results.
Net operating revenues for the Ambulatory Care unit are likely to be between $4.325-$4.475 billion in 2024. 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 16.8% to $10.21 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 58.48%.
Century Communities is a home building and construction company. Its activities comprise land acquisition, development and entitlements, and the acquisition, development, construction, marketing, and sale of various single-family detached and attached residential home projects.
The company’s initiative of offering affordable homes along with several incentive offerings, including lot premiums, interest rate buydowns and discounts on base home prices, is expected to be a tailwind. Also, its focus on building homes on a spec basis bodes well. This initiative of the company helps in direct cost control, sparks the availability of quick move-ins and assures buyers of financing certainty.
Furthermore, despite the improving inventory of existing home sales, the company is likely to benefit from increasing new home contracts, thanks to its improved cycle times and increased level of home starts. The company’s focus on affordability, along with the reduced cycle times and cost-reduction initiatives, positions it well for the rest of 2024.
The Zacks Consensus Estimate for 2024 earnings has moved north by 3.1% to $10.43 per share in the past 30 days. CCS surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 35.57%.
Magnite provides sell-side advertising platform. The company's omnichannel advertising platform enables publishers to monetize across all auction types and formats, including CTV, desktop display, video, audio and mobile.
Magnite intends to continuously invest in providing seamless services to its clients from different domains. The combination of SpringServe and Magnite streaming SSP offers a complete solution that includes ad serving, yield monetization, audience capabilities and a host of tools to protect the consumer viewing experience and honor complex rules of competitive separation and frequency capping.
ClearLine, the company’s self-service direct buying platform, is continuing to gain traction with numerous agencies and multiple brands testing and transacting through it. Contributions from a robust partner base, including the likes of Sling, Hulu, Pluto, Tubi, Discovery and Fox, and device manufacturing companies like Roku and Samsung, are expected to have contributed to MGNI’s revenues in the upcoming quarters.
The Zacks Consensus Estimate for MGNI’s 2024 earnings has remained steady at 82 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 252.78%.
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