4 Stocks Trading Near 52-Week High That Can Climb Further (2024)

Stocks hitting their 52-week high and delivering consistent performance in the past few quarters 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 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 MYR Group MYRG, Henry Schein HSIC, The Kroger Co. KR and Coty COTY are expected to maintain the 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 strategy borrows from the basics of momentum investing. This technique bets on “buy high, sell higher.”

Many a time, stocks hitting 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.

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.

The inclusion of this metric ensures that there is a substantial volume of shares, so trading is easier.

Here are our four picks of the 22 stocks that made it through the screen:

MYR Group is implementing targeted strategies to capture new market opportunities in the evolving clean energy landscape while continuing organic and acquisitive expansion. These make it a solid investment option in the utility sector. Last month, its unit MYR Group Construction Canada, Ltd. acquired all issued and outstanding shares of capital stock of Powerline Plus Ltd. and its affiliate (“Powerline Plus Companies”). This acquisition will strengthen MYR Group’s transmission and distribution business as well as expand its geographical reach.

The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for MYRG’s 2023 earnings has increased 4.6% to $5.68 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing the same once, the average surprise being 13.17%.

Henry Schein is a leading distributor of healthcare products and services across the globe. Henry Schein’s distribution business boasts a wide global footprint with 61 distribution centers. Apart from North America and Canada, the company has a presence in Australia and New Zealand as well as in emerging nations like China, Brazil, Israel, the Czech Republic and Poland. We believe Henry Schein’s worldwide reach offers it a major competitive advantage over other players in the healthcare distribution industry. Henry Schein’s joint venture with Internet Brands — Henry Schein One — recently announced the integration of AI solutions into Dentrix Ascend. This is a cloud-based practice management software by Henry Schein One. The latest development solidifies the company’s commitment to helping dental practices leverage the benefits of artificial intelligence. The upgrade in the cloud-based solution expands the company’s Technology and Value-added Services business.

The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for HSIC’s 2023 earnings has moved up by 0.2% to $5.32 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 2.97%.

Kroger has been undertaking efforts to strengthen its position not only with respect to products but also in terms of the way consumers shop. It has been making investments to enhance product freshness and quality as well as expand digital capabilities. Kroger has been augmenting Our Brands portfolio by launching new products. Recently, Kroger entered into a deal to acquire Albertsons Companies. The tie-up would help strengthen its position in the competitive grocery space. The combined entity would benefit from a loyal customer base and a broader portfolio.

The company currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for KR’s 2023 earnings has remained steady at $4.49 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 9.76%.

Coty has been benefiting from its focus on six strategic pillars that are aimed at sustainable growth. These include stabilizing Consumer Beauty make-up brands and mass fragrances, accelerating luxury fragrances and setting up Coty as a core player in prestige make-up, establishing a skincare portfolio in prestige and mass channels, strengthening e-commerce and Direct-to-Consumer capabilities, growing presence in China via Prestige and certain Consumer Beauty brands, as well as setting Coty as an industry leader in sustainability. Coty made several strategic partnerships to enhance its brand portfolio. Recently, management raised its like-for-like sales view for fiscal 2023.

The company currently has a Zacks Rank of 2. The Zacks Consensus Estimate for COTY’s fiscal 2023 earnings has remained steady at 37 cents per share in the past 30 days. The company surpassed the Zacks Consensus Estimate twice in the trailing four quarters while breaking even twice, the average surprise being 24.17%.

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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