Five Fundamentally Sound High-Flying Stocks To Scale Higher

A 52-week high generally serves as an indicator for investors as stocks near that level are perceived to be winners.

No matter how disciplined and systematic investors are, equity market volatility will always manage to affect some in the end. Only a few lucky ones have a smooth sail while others fall victim to ad hoc strategies.

More often than not, investors wonder if a high price range has made the stock overpriced. While the apprehensions are not absolutely baseless, all stocks hitting a 52-week high are not necessarily overpriced.

In fact, an investor might miss out on top gainers in an attempt to avoid the steep prices of stocks that are near their 52-week high mark.

A stock can maintain the momentum and keep scaling higher with time. So, one should take a more informed approach to understand if any further upside is left.

One particular strategy advises investors to gamble on stocks that have scaled 52-week highs. This is fairly a new approach in the investing rulebook. Borrowing from the basics of Momentum investing, this technique bets on the principle of buying high and selling higher.

Though skeptics may raise a brow on the mettle of this 52-week high investment strategy, we believe that this, when clubbed with the right set of parameters, will help rake in sizable gains. A wide group of investors today favor stocks with prospects of scaling higher. These investors have mastered the art of finding stocks that have strong upside potential and are still undervalued.

Here we discuss a strategy to find the right stocks.

Borrowing from the basics of momentum investing, this technique bets on “buy high, sell higher.”

52-Week High: A Good Indicator

Many a time, stocks hitting a 52-week high fail to scale higher despite potential. This is because investors fear that the stocks are overvalued and a price crash is impending.

In fact, overvaluation is quite natural for most of these stocks as investors’ focus (or willingness to pay premium) has helped them reach the level. But that does not always mean an impending decline. Factors such as robust sales, surging profit levels, earnings growth prospects and strategic acquisitions that encouraged investors to bet on these stocks could keep them motivated if there is no tangible negative. In other words, the momentum might continue.

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