雅虎香港財經 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 Host Hotels & Resorts HST, Brinker International EAT, DaVita DVA and Pilgrim's Pride Corporation PPC 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:
Host Hotels & Resorts is one of the leading lodging real estate investment trusts that engages in the ownership, acquisition and redevelopment of luxury and upper-upscale hotels in the United States and abroad.
The improvement in group and business transient travel demand has aided occupancy and revenue per available growth at the company’s properties over the past few quarters. It is expected to witness a stable operating environment in 2024 on the back of continuous improvement in group business, a gradual recovery in business transient and steady demand for leisure activities. Through its capital-recycling program, the company has made concerted efforts to dispose of non-strategic assets that have lower growth potential or properties with significant capital expenditure requirements. It has redeployed the proceeds to acquire or invest in better-yielding assets, highlighting its prudent capital-management practices.
The Zacks Consensus Estimate for HST’s 2024 earnings has gained 4.2% in the past 30 days to $1.97 per share. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same once, the average surprise being 6.59%.
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. Maggiano’s is a full-service, national, casual dining Italian restaurant brand featuring individual and family-style menus and most restaurants.
The company is benefiting from effective marketing and pricing strategies resulting in notable improvements in guest traffic. Also, focus on menu adjustments along with remodeling and expansion initiatives bodes well. Owing to the improving trend, the company now expects fiscal 2024 EPS in the range of $3.45-$3.70, up from the prior range of $3.35-$3.65. Brinker 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 2024 earnings has remained steady at $3.69 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 212.68%.
DaVita is a leading provider of dialysis services in the United States to patients suffering from chronic kidney failure, also known as end-stage renal disease. Per management, DaVita has been witnessing improvements in census and treatments per day over the past few months, reflecting a better macro environment and progress in the company’s operating initiatives.
The company has been expanding its global presence via its Integrated Kidney Care business. It has been generating solid revenues by providing dialysis services. As of Dec 31, 2023, DaVita provided dialysis services to around 250,200 patients at 3,042 outpatient dialysis centers, of which 2,675 were U.S. centers while 367 were located across 11 other countries. DaVita has been opening and acquiring several dialysis centers, both within the United States and overseas, which is promising. A strong solvency position is an added plus.
The Zacks Consensus Estimate for DVA’s 2024 earnings has gained 1.2% in the past 30 days to $8.97 per share. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 35.57%.
Pilgrim’s Pride is engaged in the processing, production, marketing and distribution of frozen, fresh as well as value-added chicken products. The company offers its services in the United States, Mexico, France, the Netherlands, Puerto Rico and Mexico through a number of distributors, retailers and food service operators.
The company is witnessing growth in the Retail and Foodservice business in Prepared Foods segment along with enhanced operations in Big Bird. Focus on key customers in the foodservice sector has yielded a substantial pipeline of promotional initiatives with leading retailers and food service providers. Pilgrim's Pride is on track with its strategic growth efforts, such as facility expansions and technology integration, which are likely to boost operational efficiency. Apart from this, Pilgrim's Pride has been steadily augmenting marketing support for its brands as they expand and enter new regions.
The Zacks Consensus Estimate for PPC’s 2024 earnings has increased 19.3% to $2.97 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 252.84%.
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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
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Host Hotels & Resorts, Inc. (HST) : Free Stock Analysis Report
DaVita Inc. (DVA) : Free Stock Analysis Report
Brinker International, Inc. (EAT) : Free Stock Analysis Report
Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report
