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5 Stocks Trading Near 52-Week Highs 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 Century Communities, Powell Industries, Sylvamo, IAMGOLD and Universal Health Services 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.
Here are our five picks out of the 13 stocks that made it through the screen:
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 0.8% to $10.72 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%.
Powell Industries is a prominent electrical equipment manufacturer, riding on its strong foothold and improving conditions in two key markets — oil and gas and petrochemical. The company’s efforts to strengthen its project portfolio beyond the core oil and gas, and petrochemical end markets have also enhanced its market share across the utility, commercial and other industrial markets. POWL is also benefiting from increased demand for electrical power from data centers.
Powell is strengthening its participation across the electrical power value chain and benefiting from solid momentum in data center and utility markets. The company witnessed strong bookings in electric utility and commercial markets in the first nine months of fiscal 2024 in the United States. Powell’s capacity expansion initiatives, particularly at the product factory in Houston, bode well. The expansionary efforts have been enabling the company to better serve its customers with enhanced offerings across data centers, hydrogen, carbon capture and other transitional energy markets.
The Zacks Consensus Estimate for fiscal 2024 earnings has remained steady at $12.01 per share over the past 30 days. POWL surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 69.88%.
Sylvamo produces and markets uncoated freesheet for cut size, offset paper and pulp. Stronger order books and higher pulp and paper prices are likely to aid its top-line growth in the near term. The company has initiated a cost-reduction program called Project Horizon, which is focused on streamlining its organization and cost structures in an effort to make a leaner, stronger company.
SLVM is on track to realize savings of at least $110 million by the end of 2024. Around $80 million of the target will come from operational improvements in its mills and supply chains and the balance from the reduction in selling and administrative expenses. The company continues to lower its debt levels and maintains a strong financial position that enables it to invest in its business. It has a pipeline of more than $200 million of high-return capital projects, which will boost its earnings and cash flow profile.
Earnings estimates for Sylvamo’s fiscal 2024 have remained steady at $7.40 per share over the past 30 days. SLVM surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 23.97%.
IAMGOLD is an international gold exploration and mining company based in Canada. IAG is poised for growth, supported by an upward trend in gold prices, the ongoing ramp-up at Côté Gold, and the established portfolio of early-stage and advanced exploration projects within high-potential mining districts. IAG continues to invest in maximizing production and increasing the life of its existing mines, advancing development and exploration projects.
IAMGOLD expects production from the Côté Gold mine in 2024 to be near the lower end of 130,000-175,000 ounces (on a 60.3% basis). IAG has the financing in place and is set to buy a 9.7% interest in Côté Gold on Nov. 30, 2024. This will take its stake in the project to 70%.
We expect the contribution from the mine to IAG’s production in 2024 to be higher once this deal is completed. Significant operational projects planned for the next years include the Westwood ramp-up to safely access other mining areas that were affected by the seismic activity in 2020.
The Zacks Consensus Estimate for 2024 earnings has moved north by 5.1% to 41 cents per share in the past 30 days. IAG surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 200%.
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 remained steady at $15.91 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%.
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.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include Century Communities, Powell Industries, Sylvamo, IAMGOLD and Universal Health Services
For Immediate Release
Chicago, IL – September 19, 2024 – Stocks in this week’s article are Century Communities (CCS - Free Report) , Powell Industries (POWL - Free Report) , Sylvamo (SLVM - Free Report) , IAMGOLD (IAG - Free Report) and Universal Health Services (UHS - Free Report) .
5 Stocks Trading Near 52-Week Highs 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 Century Communities, Powell Industries, Sylvamo, IAMGOLD and Universal Health Services 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.
Here are our five picks out of the 13 stocks that made it through the screen:
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 0.8% to $10.72 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%.
Powell Industries is a prominent electrical equipment manufacturer, riding on its strong foothold and improving conditions in two key markets — oil and gas and petrochemical. The company’s efforts to strengthen its project portfolio beyond the core oil and gas, and petrochemical end markets have also enhanced its market share across the utility, commercial and other industrial markets. POWL is also benefiting from increased demand for electrical power from data centers.
Powell is strengthening its participation across the electrical power value chain and benefiting from solid momentum in data center and utility markets. The company witnessed strong bookings in electric utility and commercial markets in the first nine months of fiscal 2024 in the United States. Powell’s capacity expansion initiatives, particularly at the product factory in Houston, bode well. The expansionary efforts have been enabling the company to better serve its customers with enhanced offerings across data centers, hydrogen, carbon capture and other transitional energy markets.
The Zacks Consensus Estimate for fiscal 2024 earnings has remained steady at $12.01 per share over the past 30 days. POWL surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 69.88%.
Sylvamo produces and markets uncoated freesheet for cut size, offset paper and pulp. Stronger order books and higher pulp and paper prices are likely to aid its top-line growth in the near term. The company has initiated a cost-reduction program called Project Horizon, which is focused on streamlining its organization and cost structures in an effort to make a leaner, stronger company.
SLVM is on track to realize savings of at least $110 million by the end of 2024. Around $80 million of the target will come from operational improvements in its mills and supply chains and the balance from the reduction in selling and administrative expenses. The company continues to lower its debt levels and maintains a strong financial position that enables it to invest in its business. It has a pipeline of more than $200 million of high-return capital projects, which will boost its earnings and cash flow profile.
Earnings estimates for Sylvamo’s fiscal 2024 have remained steady at $7.40 per share over the past 30 days. SLVM surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 23.97%.
IAMGOLD is an international gold exploration and mining company based in Canada. IAG is poised for growth, supported by an upward trend in gold prices, the ongoing ramp-up at Côté Gold, and the established portfolio of early-stage and advanced exploration projects within high-potential mining districts. IAG continues to invest in maximizing production and increasing the life of its existing mines, advancing development and exploration projects.
IAMGOLD expects production from the Côté Gold mine in 2024 to be near the lower end of 130,000-175,000 ounces (on a 60.3% basis). IAG has the financing in place and is set to buy a 9.7% interest in Côté Gold on Nov. 30, 2024. This will take its stake in the project to 70%.
We expect the contribution from the mine to IAG’s production in 2024 to be higher once this deal is completed. Significant operational projects planned for the next years include the Westwood ramp-up to safely access other mining areas that were affected by the seismic activity in 2020.
The Zacks Consensus Estimate for 2024 earnings has moved north by 5.1% to 41 cents per share in the past 30 days. IAG surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 200%.
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 remained steady at $15.91 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%.
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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2337626/5-stocks-trading-near-52-week-high-with-more-upside-potential
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.