5 Stocks Near 52-Week Highs To Scoop Up

A few tricks and tips can help investors compound their portfolio returns. However, devising the right strategy from the extensive pool of information might prove to be quite a daunting task for seasoned investors, let alone new entrants in the world of stock trading.

In this screen we discuss one of the oldest investment techniques, betting on stocks near 52-week highs. It is one of the most controversial strategies, with one set of experts cautioning investors against it and the other promoting it as an easy way of making quick bucks.

Meanwhile, a wide group of investors today favor winning stocks with prospects of scaling higher. These investors have mastered the art of finding stocks that have strong upside potential and are still undervalued. This screen helps you eliminate the risks associated with an ad-hoc 52-week high investment by clubbing it with a set of parameters.

An Insight into 52-Week High Stocks

Stocks near 52-week highs often instill the presumptive “adjustment and anchoring bias” principle in the minds of investors. This principle works on the belief that investors use the 52-week high price as a reference point and value stocks against this anchor.

Many a times such stocks are prevented from scaling higher despite robust potential, due to the psychological bias of investors who fear that the stocks are overvalued and a price crash is impending.

A few of the stocks remain undervalued due to prolonged under reaction on part of investors, despite bullish growth drivers. Meanwhile, news pertaining to robust sales, surging profit levels, bullish earnings prospects and strategic acquisitions can drive the stock higher.

However, when a string of positive developments start dominating the market, investors find their under-reaction unwarranted and the renewed interest might drive stocks beyond the 52-week high bar. Wall Street’s fast paced trading makes it imperative for investors to step in before the market gets a whiff of it.

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