4 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 Maximus MMS, Pediatrix Medical Group, Inc. MD, Sally Beauty SBH and State Street STT 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 Indicator

Many 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 underreaction unwarranted, even if there are no company-specific driving forces.

Setting the Right Filters

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.

Current Price/52 Week High >= .8: This 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 0.8 implies that the stock is trading within 20% of its 52-week high range.

% Change Price – 4 Weeks > 0: It ensures that the stock price has moved north over the past four weeks.

% Change Price – 12 Weeks > 0: This metric guarantees a continued upward price momentum for the stock over the past three months as well.

Price/Sales <= XIndMed: The lower, the better.

P/E using F(1) Estimate <= XIndMed: This 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) >= XIndMed: This 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 <=2: No 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) or #2 (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 >= 8: This parameter will help screen stocks that are trading at $8 or higher.

Volume – 20 days (shares) >= 100000: The inclusion of this metric ensures that there is a substantial volume of shares, so trading is easier.

Here are four stocks, each sporting a Zacks Rank #1, out of the 13 that made it through the screen:

Maximus has built a strong reputation as a trusted partner to governments worldwide, with over four decades of expertise, delivering cost-effective, scalable solutions in health and human services. Long-term contracts, steady dividend payouts, and its ability to adapt to complex social needs, expand into clinical services, and leverage a skilled workforce give it a competitive edge.

Maximus is enhancing its competitive edge with the achievement of CMMC Level 2 certification. This demonstrates its ability to meet strict Department of Defense cybersecurity standards, safeguard sensitive defense data and accelerate program launches by bypassing lengthy Authorization to Operate delays. This milestone reinforces Maximus’ position as a trusted partner for defense and national security missions.

The Zacks Consensus Estimate for MMS’s fiscal 2025 earnings has moved north by 3.3% to $6.95 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 21.43%.

Pediatrix Medical’s top line has been benefiting from strong same-unit revenue gains, improved neonatology patient volumes, stable payor mix and higher hospital contract administrative fees. It is boosting service offerings across maternal-fetal medicine, neonatology and obstetrics. The company projects adjusted EBITDA to be within $245-$255 million in 2025. It remains focused on streamlining its portfolio by divesting non-core assets, allowing it to sharpen its focus on high-margin core services.

MD has a strong pipeline of future acquisitions and continued expansion of specialty care services. It projects net income to be within the range of $126.02-$133.32 million for 2025. It is expanding telehealth services to provide more accessible and affordable healthcare.

The Zacks Consensus Estimate for MD’s 2025 earnings has remained steady at $1.78 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 28.74%.

Sally Beauty continues to advance its strategic priorities, focusing on customer engagement, high-margin owned brands and innovation. The company is undergoing a brand refresh, modernizing its identity and enhancing its digital presence and in-store experience to strengthen its position in the beauty industry. The expansion of its marketplace partnerships and loyalty program is driving customer retention and sales growth, while investments in exclusive brands and product innovation support long-term success. 

The Fuel for Growth program holds the key to cost savings and margin expansion through operational efficiencies. For fiscal 2025, comparable sales are now projected to remain flat compared with the previous guidance of flat to a 1% decline year over year. The company now expects its adjusted operating margin within the range of 8.6-8.7% compared with the earlier guided band of 8-8.5% for fiscal 2025.

The Zacks Consensus Estimate for SBH’s fiscal 2025 earnings has remained steady at $1.84 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 8.32%.

State Street provides a range of products and services for institutional investors worldwide through its subsidiaries. Solid business servicing wins, a global footprint, and strategic acquisitions and collaborations will continue to support fee income growth. We expect fee revenues to record a CAGR of 4.6% over the next three years. Higher interest rates will aid net interest income (NII) growth. We expect NII to witness a CAGR of 1.4% by 2027. Rising assets under management (AUM) balance will drive financials. Our estimates for total AUM imply a CAGR of 14.9% by 2027.

STT is teaming up with Apex Fintech Solutions in a move that signals its ambition to transform the wealth management infrastructure. Through this collaboration, STT will integrate Apex’s custody and clearing technology with its institutional-grade infrastructure and global client network. The result will be a differentiated solution that allows wealth managers, fintech platforms and advisors to launch and scale wealth services more efficiently while providing a seamless end-client experience.

The Zacks Consensus Estimate for STT’s 2025 earnings has moved north by 0.9% to $9.94 per share in the past 30 days. The company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.58%.

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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.

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This article originally published on Zacks Investment Research (zacks.com).

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