The stocks in this article are all trading near their 52-week highs.
This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance.
While momentum can be a leading indicator, it has burned many investors as it doesn’t always correlate with long-term success. On that note, here are two stocks with the fundamentals to back up their performance and one best left ignored.
One Stock to Sell:
Parker-Hannifin (PH)
One-Month Return: +1.8%
Founded in 1917, Parker Hannifin (NYSE:PH) is a manufacturer of motion and control systems for a wide variety of mobile, industrial and aerospace markets.
Why Do We Think Twice About PH?
- Sizable revenue base leads to growth challenges as its 2% annual revenue increases over the last two years fell short of other industrials companies
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Anticipated sales growth of 3.9% for the next year implies demand will be shaky
At $752.33 per share, Parker-Hannifin trades at 25.8x forward P/E. Read our free research report to see why you should think twice about including PH in your portfolio.
Two Stocks to Watch:
Watts Water Technologies (WTS)
One-Month Return: +11%
Founded in 1874, Watts Water (NYSE:WTS) specializes in manufacturing water products and systems for residential, commercial, and industrial applications globally.
Why Does WTS Stand Out?
- Superior product capabilities and pricing power are reflected in its best-in-class gross margin of 45.5%
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
Watts Water Technologies is trading at $280.57 per share, or 29.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Ameris Bancorp (ABCB)
One-Month Return: +8.5%
Tracing its roots back to 1971 and expanding significantly through both organic growth and strategic acquisitions, Ameris Bancorp (NYSE:ABCB) is a financial holding company that provides a full range of banking services to retail and commercial customers across select markets in the southeastern United States.
Why Do We Like ABCB?
- Additional sales over the last two years increased its profitability as the 15% annual growth in its earnings per share outpaced its revenue
- Impressive 14.6% annual tangible book value per share growth over the last five years indicates it’s building equity value this cycle
- Market-beating return on equity illustrates that management has a knack for investing in profitable ventures
Ameris Bancorp’s stock price of $72.04 implies a valuation ratio of 1.2x forward P/B. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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