4 stocks trading near 52-week high that may move higher – July 13, 2022

Investors generally consider a 52-week high to be a good yardstick for determining an entry or exit point for a given security. However, stocks reaching new 52-week highs are often prone to profit-taking, leading to pullbacks and trend reversals.

Also, given the high price, investors often wonder if the stock is overvalued. While the speculation isn’t absolutely groundless, not every stock hitting a 52-week high is necessarily overvalued.

In fact, investors might lose top earners in an attempt to avoid high prices.

actions such as AMN health services (AMN free report), otter tail (OTTR free report), Encore Capital Group (ECPG free report) and Cboe World Markets (CBOE Free Report) should maintain the momentum and continue to reach new heights. More information about a stock is needed to understand whether or not there is further upside potential.

Here we discuss a strategy for finding the right stocks. The technique borrows from the basics of momentum investing and bets on “buy high, sell higher”.

52 weeks high: a good indicator

Often, stocks hitting a 52-week high fail to rise despite their potential. This is because investors fear that the shares are overvalued and expect the price to crash.

Overvaluation is natural for most of these stocks, as investors’ attention (or willingness to pay the premium) helped them to the level. But this does not always indicate an impending decline. Factors such as robust sales, rising earnings levels, earnings growth prospects and strategic acquisitions that have encouraged investors to bet on these stocks could keep them motivated if there is no tangible negative. . In other words, the momentum could continue.

Moreover, when a series of positive developments dominate the market, investors find their underreaction unwarranted, even if there are no firm-specific driving forces.

Set the right filters

We ran a screen to focus on the 52 week high stocks (trading near the high) that hold huge upside potential. The screen includes settings to pre-screen stocks with strong earnings growth expectations, solid value metrics, and price momentum.

Additionally, the screen filters out stocks that are relatively undervalued relative to their peers, both in terms of earnings and sales, ensuring their rally continues for some time to come.

Current price / 52 week maximum >= 0.80

This is the ratio of the current price to the highest price the stock has traded at in the past 52 weeks. A reading above 0.8 implies the stock is trading within 20% of its 52-week high range.

% price change – 4 weeks > 0

It guarantees that the stock price has moved north over the past four weeks.

% price change – 12 weeks > 0

This measure also ensures continued upward momentum in the share price over the past three months.


The lower, the better.

P/E using F(1) Estimate

This metric measures the amount an investor invests in a company to get a dollar of profit. It narrows the list of stocks to those that are undervalued relative to the industry.

EPS growth over one year F(1)/F(0) >= XIndMed

This helps to pick stocks that have higher growth rates than the industry. This is a meaningful indicator, as decent earnings growth bolsters investor optimism.

Zacks Rank =1

No screening is complete without the proven Zacks Rank since its inception. It’s a fundamental truth that stocks with a Zacks Rank #1 (Strong Buy) have always been able to weather adversity and beat the market average. You can see the full list of today’s Zacks #1 Rank stocks here.

Current price >= 5

This setting will help filter out stocks that are trading at $5 or more.

Volume – 20 days (stocks) >= 100000

The inclusion of this metric ensures that there is a substantial volume of stocks, which makes trading easier.

Here are our four picks from the eight stocks that crossed the screen:

AMN health services is a travel health personnel recruitment company. It recruits and places nurses, physicians and other healthcare professionals on assignment or on permanent assignment in acute care facilities, medical practice groups as well as other healthcare facilities. The recent acquisition of Connetics USA should expand its international recruitment activity. The strength of the healthcare managed services program (MSP) and wide range of services bodes well.

The company currently has a Zacks Rank of 1 and a VGM Score of A. The Zacks consensus estimate for AMN Healthcare Services earnings in 2022 has been revised up 2.8% to $10.41 per share in the last 60 days. The company has exceeded the Zacks consensus estimate for the past four quarters, with the average surprise being 15.6%.

otter tail offers attractive investment opportunities in the utilities sector, given its dual-platform business model comprised of electrical and manufacturing units. The Company, through its subsidiaries, is also engaged in other businesses, known as health services operations and diversified operations. To ensure more stable cash flow, Otter Tail is considering investing in rate base growth opportunities. The company plans to invest $978 million over the 2022-2026 period in the power, manufacturing and plastics segments.

The company currently has a Zacks Rank of 1 and a VGM Score of C. The Zacks consensus estimate for Otter Tail’s 2022 earnings rose 37.7% to $5.37 per share over the past 60 last days. The company has exceeded the Zacks consensus estimate for the past four quarters, with the average surprise being 36.95%.

Encore Capital Group is a specialized international financial company that provides debt collection solutions and other related services to consumers across a wide range of financial assets. The company primarily buys portfolios of defaulted consumer debt at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. The company also provides debt servicing and other portfolio management services to loan originators for non-performing loans.

The company currently has a Zacks Rank of 2 and a VGM Score of A. The Zacks consensus estimate for Encore Capital Group’s 2022 earnings has been flat at $12.88 per share for the past 60 days. The company has exceeded the Zacks consensus estimate for the past four quarters, with the average surprise being 80.4%.

Cboe World Markets is one of the largest exchange operators by volume in the United States and a world-leading marketplace for ETP trading. It is considering strategic acquisitions to gain competitive advantage by diversifying and adding capabilities to its portfolio, generating spend synergies and venturing into new markets. It forecasts inorganic net revenue growth of 5% to 7% in 2022. CBOE Global is also exploring new markets like the Middle East, Scandinavia and Asia, while seeking jurisdictional approval in more established markets, including Switzerland and Israel.

The company currently has a Zacks ranking of 2. The Zacks consensus estimate for Cboe Global Markets earnings in 2022 rose 0.6% to $6.33 per share over the past 60 days. The company has exceeded the Zacks consensus estimate for the past four quarters, with the average surprise being 4.58%.

Get the rest of the stocks on the list and start testing this idea and others. All of this can be done with Research Wizard stock picking and back testing software.

The research assistant is a great starting point. It’s easy to use. Everything is in plain language. And it’s very intuitive. Start your search assistant trial today. And the next time you’re reading an economic report, open up the research assistant, plug in your findings, and see what gems come out.

Click here to sign up for a free trial of Research Assistant 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 the options mentioned herein. An affiliated investment adviser may hold or have shorted securities and/or hold long and/or short positions in options mentioned herein.

Disclosure: Information on the performance of Zacks portfolios and strategies is available at: https://www.zacks.com/performance/.

Comments are closed.