3 Stocks Trading Near 52-Week High With Room to Rise 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 Fresenius Medical Care AG & Co. FMS, Deutsche Telekom DTEGY and The Hanover Insurance Group THG 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 IndicatorMany 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 encourage 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 FiltersWe 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 >= .8This 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 > 0It ensures that the stock price has moved north over the past four weeks.% Change Price – 12 Weeks > 0This metric guarantees a continued upward price momentum for the stock over the past three months as well.Price/Sales <= XIndMedThe lower, the better.P/E using F(1) Estimate <= XIndMedThis 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) >= XIndMedThis 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 =1No 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 >= 8This parameter will help screen stocks that are trading at $8 or higher.Volume – 20 days (shares) >= 100000The inclusion of this metric ensures that there is a substantial volume of shares, so trading is easier.Here are three stocks of the five that made it through the screen:Fresenius Medical Care is one of the largest integrated providers of products and services for individuals undergoing dialysis following chronic kidney failure. Through its network of more than 3,600 clinics across the world, the company offers dialysis services and products in more than 120 countries and employs over 109,000 staff in more than 50 countries.The company is benefiting from improving treatment volumes as well as a stabilizing labor environment in the United States. The company’s divestment of its non-core and dilutive assets looks promising as they will help it focus on its core and growing categories as well as boost its cash resources. Earlier in March, FMS’ parent company Fresenius SE raised nearly €1.1 billion ($1.2 billion) through a strategic sale of shares in Fresenius Medical Care AG and the issuance of exchangeable bonds linked to the dialysis firm.Fresenius Medical offers a wide array of hemodialysis, peritoneal dialysis and acute dialysis products. To further boost the quality of life for its patients and increase their choice of available treatment options, Fresenius Medical Care remains focused on further expanding its home dialysis offerings. The Zacks Consensus Estimate for FMS’ 2025 earnings has moved north by 4.7% to $2.01 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 15.67%.Deutsche Telekom is Europe's largest communications company and one of the largest communication carriers worldwide. Through T-Mobile, Deutsche Telekom's mobile telephony subsidiary, and other subsidiaries and investments, the company serves mobile telephony customers worldwide.In addition to its strong position in the domestic market, the company is poised to benefit from the accretive post-merger integration of T-Mobile US Inc. and Sprite in the United States, in which it owns about 43% stake. The removal of forced cable TV access in multiple dwelling units in Germany through telecom legislation is likely to help the company expand its broadband market. Moreover, an aggressive fiber rollout strategy across the country is expected to augment its domestic market hold.The Zacks Consensus Estimate for DTEGY’s 2025 earnings has moved north by 9% to $2.31 per share in the past 30 days. The Hanover Insurance Group is a property-casualty insurance provider offering personal, commercial and specialty coverage through its core segments, including standard lines and specialty units. Hanover Insurance has evolved as a more balanced and differentiated property and casualty franchise and now envisions being a premier P&C franchise in the independent agency channel and targets delivering about 10% CAGR in Specialty written premiums over the next five years. A prudent pricing segmentation, rate increases and emphasis on growth in target states, product lines and industry classes in the middle market should help it grow and achieve goals. Hanover Insurance has built a diversified book of business banking on prudent underwriting, data, analytic tools and technology, which, in turn, has lowered coastal exposure and enhanced pricing for catastrophes. THG also continues to invest in technology to upgrade its front-end capabilities.The Zacks Consensus Estimate for THG’s 2025 earnings has remained steady at $14.37 per share in the past 30 days. Get the remaining 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 trial to the Research Wizard 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.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fresenius Medical Care AG & Co. KGaA (FMS): Free Stock Analysis Report Deutsche Telekom AG (DTEGY): Free Stock Analysis Report The Hanover Insurance Group, Inc. (THG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks