雅虎香港財經 Should You Buy Stocks at All Time Highs?
When stocks are cruising at or nearing all-time highs, it reflects considerable bullishness with trends where buyers are in control. Stocks making new highs tend to make even higher highs, particularly when analysts' positive earnings estimate revisions are rolling in.
That’s been precisely the case for Royal Caribbean Group RCL, Vital Farms VITL, and Leidos LDOS, all of which presently sport a favorable Zacks Rank paired with market-beating price action. Below is a chart illustrating the YTD performance of each, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a closer look at what’s been driving the bullish behavior.
Consumers Flock to Royal Caribbean Group
Royal Caribbean Group’s outsized share performance has been aided by robust quarterly results, with the company recently upping its current year (FY24) EPS outlook thanks to continued strong demand. The company has enjoyed a robust booking environment, also being aided by higher onboard spending among consumers.
Analysts took note of the company’s favorable position, upping their earnings outlook across the board and pushing the stock into a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Jason Liberty, CEO, was pleased with the above-mentioned set of results, stating, ‘Building on this momentum, we expect to achieve all our Trifecta financial goals in 2024, which allows us to focus on a new era of growth to drive long-term shareholder returns and take a greater share of the rapidly growing $1.9 trillion global vacation market.’
Overall, the company’s top line has recovered nicely from the pandemic shock, now seeing a small acceleration thanks to a resilient consumer. Consensus expectations for its current fiscal year (FY24) suggest an additional 17% pop in sales.
Image Source: Zacks Investment Research
Vital Farms Announces New Land Agreement for Growth Expansion
Vital Farms, a current Zacks Rank #1 (Strong Buy), offers a range of produced pasture-raised foods. Like RCL, robust quarterly results have aided the company’s share surge, exceeding our consensus expectations by an average of 100% across its last four releases. Share reaction post-earnings has been considerably strong, as shown below.
Image Source: Zacks Investment Research
The company posted record net revenue of $148 million in its latest release, 24.1% higher than the year-ago period and driven by a favorable price mix paired with 18.1% year-over-year volume gains. Margin expansion was also a critical highlight, with its gross margin expanding 400 basis points to 39.8% thanks to benefits of scale and improved operational efficiencies.
Please note that the margin chart below is on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Vital Farms upped its current year (FY24) outlook following the results, with it also announcing that it’s signed an agreement to acquire land for a new egg washing and packing facility for further expansion.
It’s worth noting that shares currently trade at a steep forward 12-month earnings multiple of 43.5X, which is reflective of investors’ growth expectations. Analysts have raised their expectations in a bullish way across several timeframes.
Image Source: Zacks Investment Research
Leidos Breaks out of Multi-Year Range
Leidos is a global science and technology leader serving the defense, intelligence, civil, and health markets. The stock sports a Zacks Rank #1 (Strong Buy), with shares enjoying post-earnings positivity as of late just like the above-mentioned companies.
The stock has broken out of a multi-year range in 2024, now cruising at all-time highs.
Image Source: Zacks Investment Research
Leidos enjoyed solid demand across all its segments throughout its latest quarter, leading to 7% year-over-year sales growth. Just like those above, the company delivered a guidance upgrade following the print, raising its outlook and causing buyers to swarm post-earnings.
Leidos’ growth profile remains bright, with consensus expectations for its current year suggesting 20% EPS growth on 4% higher sales. The stock sports a Style Score of ‘B’ for Growth.
Image Source: Zacks Investment Research
Bottom Line
Stocks making new highs tend to make even higher highs, particularly when analysts' positive earnings estimate revisions are rolling in.
As the examples above show, listening to the Zacks Rank can consistently result in market-beating gains, as positive earnings estimate revisions that commonly stem from better-than-expected quarterly prints provide the fuel needed to move higher.
That’s precisely what’s driving the outsized performance behind Royal Caribbean Group RCL, Vital Farms VITL, and Leidos LDOS.
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Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
Vital Farms, Inc. (VITL) : Free Stock Analysis Report
