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5 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 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 IAMGOLD (IAG - Free Report) , Leidos Holdings (LDOS - Free Report) , Brinker International (EAT - Free Report) , Phibro Animal Health (PAHC - Free Report) and State Street (STT - 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 five picks out of the 13 stocks that made it through the screen:
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. IAMGOLD recently announced that production from the Côté Gold mine was 68,000 gold ounces in the third quarter of 2024 on a 100% basis (or attributable production of 41,000 ounces). The ramp-up of the processing plant has been on track to exit the year at 90% of the design throughput rate of 36,000 tons per day. IAG is set to buy a 9.7% interest in Côté Gold, which will take its stake in the project to 70%.
IAG continues to invest in maximizing production and increasing the life of its existing mines, advancing development and exploration projects. Significant operational projects planned for the next years include the Westwood ramp-up to safely access other mining areas affected by the seismic activity in 2020. Plans include mill and plant upgrades, fleet and utilization improvements, tailings and surface water management optimization, and additional pit developments at Essakane. These projects are expected to reduce or control the company’s cost structure and improve efficiency.
The Zacks Consensus Estimate for 2024 earnings has moved north by 8.2% to 53 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%. IAMGOLD has gained 110.3% in the year-to-date period.
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. Its defense solutions continue to witness increased contract wins from the Pentagon and other U.S. allies, which led to a solid backlog of $40.56 billion at the end of September 2024. Such a solid backlog bolsters its revenue growth prospects.
Given the geopolitical hostility prevalent worldwide and the current U.S. administration's preference for more defense spending, the macroeconomic climate in the defense space has been favorable for Leidos Holdings' prospects. In light of this, it is important to note that the fiscal 2025 U.S. defense budget, which calls for $850 billion worth of investment, implies a 1% increase from the prior year’s enacted amount. Such solid expenditure plans tend to improve the financial growth prospects of defense primes such as Leidos.
The Zacks Consensus Estimate for LDOS’s 2024 earnings has moved north by 5.6% to $9.45 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 29.92%. Leidos Holdings has gained 75.6% in the year-to-date period.
Brinker International owns, operates, develops and franchises various restaurants under Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands. Chili’s is a preeminent leader in the bar & grill category of casual dining. The brand has been functioning for over the last 40 years.
Brinker remains steadfast in its goal to drive traffic and revenues through a range of sales-building initiatives, such as streamlining of menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of better service platform. Brinker also intends to focus on balancing value offerings with margin expansion and adaptability to changing consumer preferences to drive growth.
The Zacks Consensus Estimate for EAT’s fiscal 2025 earnings has moved north by 12.9% to $5.26 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing once, the average surprise being 12.1%. Brinker International has gained 154.3% in the year-to-date period.
Phibro Animal Health is a leading global diversified animal health and mineral nutrition company. The company provides a broad range of products for animal food, including poultry, swine, beef and dairy cattle and aquaculture.
Phibro’s Animal Health business benefits from the introduction of high-value new products in the vaccine product line. The company has been strategically investing in vaccines, nutritional specialties and companion animals to capitalize on growth opportunities. With its extensive global presence, Phibro has a strong potential to expand into emerging markets. We expect the company’s revenues to witness a 19% CAGR during fiscal 2025-2027. Further, a strong, supportive balance sheet is highly encouraging.
The Zacks Consensus Estimate for PAHC’s fiscal 2025 earnings has moved north by 9% to $1.57 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing once, the average surprise being 4.1%. Phibro Animal Health Corporation has gained 97.3% in the year-to-date period.
State Street Corporation is a financial holding company. It provides a range of products and services for institutional investors worldwide through its subsidiaries. The company primarily performs its business through its principal banking subsidiary, State Street Bank.
Solid business servicing wins, a global footprint and strategic buyouts will support its fee income. Our model estimates total fee revenues to record a CAGR of 3.3% by 2026. Rising assets under management (AUM) balance will support its financials. Our estimates for total AUM imply a CAGR of 7.3% by 2026.
The Zacks Consensus Estimate for STT’s 2024 earnings has moved north by 2.6% to $8.38 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the the trailing four quarters, the average surprise being 10.63%. State Street Corporation has gained 19.9% in the year-to-date period.
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: Shutterstock
5 Stocks Trading Near 52-Week High With More Upside Potential
Investors generally consider a 52-week high a good criterion for 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 IAMGOLD (IAG - Free Report) , Leidos Holdings (LDOS - Free Report) , Brinker International (EAT - Free Report) , Phibro Animal Health (PAHC - Free Report) and State Street (STT - 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 five picks out of the 13 stocks that made it through the screen:
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. IAMGOLD recently announced that production from the Côté Gold mine was 68,000 gold ounces in the third quarter of 2024 on a 100% basis (or attributable production of 41,000 ounces). The ramp-up of the processing plant has been on track to exit the year at 90% of the design throughput rate of 36,000 tons per day. IAG is set to buy a 9.7% interest in Côté Gold, which will take its stake in the project to 70%.
IAG continues to invest in maximizing production and increasing the life of its existing mines, advancing development and exploration projects. Significant operational projects planned for the next years include the Westwood ramp-up to safely access other mining areas affected by the seismic activity in 2020. Plans include mill and plant upgrades, fleet and utilization improvements, tailings and surface water management optimization, and additional pit developments at Essakane. These projects are expected to reduce or control the company’s cost structure and improve efficiency.
The Zacks Consensus Estimate for 2024 earnings has moved north by 8.2% to 53 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%. IAMGOLD has gained 110.3% in the year-to-date period.
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. Its defense solutions continue to witness increased contract wins from the Pentagon and other U.S. allies, which led to a solid backlog of $40.56 billion at the end of September 2024. Such a solid backlog bolsters its revenue growth prospects.
Given the geopolitical hostility prevalent worldwide and the current U.S. administration's preference for more defense spending, the macroeconomic climate in the defense space has been favorable for Leidos Holdings' prospects. In light of this, it is important to note that the fiscal 2025 U.S. defense budget, which calls for $850 billion worth of investment, implies a 1% increase from the prior year’s enacted amount. Such solid expenditure plans tend to improve the financial growth prospects of defense primes such as Leidos.
The Zacks Consensus Estimate for LDOS’s 2024 earnings has moved north by 5.6% to $9.45 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 29.92%. Leidos Holdings has gained 75.6% in the year-to-date period.
Brinker International owns, operates, develops and franchises various restaurants under Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands. Chili’s is a preeminent leader in the bar & grill category of casual dining. The brand has been functioning for over the last 40 years.
Brinker remains steadfast in its goal to drive traffic and revenues through a range of sales-building initiatives, such as streamlining of menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of better service platform. Brinker also intends to focus on balancing value offerings with margin expansion and adaptability to changing consumer preferences to drive growth.
The Zacks Consensus Estimate for EAT’s fiscal 2025 earnings has moved north by 12.9% to $5.26 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing once, the average surprise being 12.1%. Brinker International has gained 154.3% in the year-to-date period.
Phibro Animal Health is a leading global diversified animal health and mineral nutrition company. The company provides a broad range of products for animal food, including poultry, swine, beef and dairy cattle and aquaculture.
Phibro’s Animal Health business benefits from the introduction of high-value new products in the vaccine product line. The company has been strategically investing in vaccines, nutritional specialties and companion animals to capitalize on growth opportunities. With its extensive global presence, Phibro has a strong potential to expand into emerging markets. We expect the company’s revenues to witness a 19% CAGR during fiscal 2025-2027. Further, a strong, supportive balance sheet is highly encouraging.
The Zacks Consensus Estimate for PAHC’s fiscal 2025 earnings has moved north by 9% to $1.57 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing once, the average surprise being 4.1%. Phibro Animal Health Corporation has gained 97.3% in the year-to-date period.
State Street Corporation is a financial holding company. It provides a range of products and services for institutional investors worldwide through its subsidiaries. The company primarily performs its business through its principal banking subsidiary, State Street Bank.
Solid business servicing wins, a global footprint and strategic buyouts will support its fee income. Our model estimates total fee revenues to record a CAGR of 3.3% by 2026. Rising assets under management (AUM) balance will support its financials. Our estimates for total AUM imply a CAGR of 7.3% by 2026.
The Zacks Consensus Estimate for STT’s 2024 earnings has moved north by 2.6% to $8.38 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the the trailing four quarters, the average surprise being 10.63%. State Street Corporation has gained 19.9% in the year-to-date period.
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/.