If there's one thing we know about the market, it's that it never ceases to surprise -- there are just too many factors to ever really expect the unexpected. That said, investors themselves are actually quite predictable, which is why the notion of patterned human behavior informs a number of different trading strategies.
Take momentum investing, for instance. History has shown that traders are notoriously slow to react to new information. After good news around a stock breaks, it takes the market a while to incorporate this new intel and adjust the price accordingly.
So a stock approaching a 52-week high, having just recently seen the arrival of good news, presents an interesting opportunity -- because sometimes it takes a stock gaining traction for other investors to take notice.
Seeing which stocks are nearing 52-week highs is only a starting point -- investing on technicals alone tells only part of the story. It makes far more sense to examine these companies in tandem with fundamental indicators. So Kapitall has narrowed down the universe of momentum stocks, selecting only the ones that are more profitable than their competitors. (Click here to access free interactive tools to analyze these ideas.)
Here's Kapitall's list of eight profitable companies hitting new highs. Think there's more good news yet to be priced into these names?
|
Company |
Gross Margin: 5-Year Average |
Net Profit Margin: 5-Year Average |
|---|---|---|
|
Automatic Data Processing |
51.11% vs. industry avg. at 37.61% | 13.49% vs. industry avg. at 8.72% |
|
Peabody Energy |
20.5% vs. industry avg. at 15.92% | 11.04% vs. industry avg. at 6.56% |
|
CSX |
31.38% vs. industry avg. at 19.47% | 12.16% vs. industry avg. at 7.67% |
|
Danaher |
45.67% vs. industry avg. at 30.99% | 10.87% vs. industry avg. at 8.94% |
|
Noble Energy |
80.14% vs. industry avg. at 44.78% | 23.86% vs. industry avg. at 11.48% |
|
Omnicom Group |
28.7% vs. industry avg. at 25.75% | 7.93% vs. industry avg. at 2.57% |
|
Portugal Telecom |
59.67% vs. industry avg. at 54.02% | 11.91% vs. industry avg. at 7.38% |
|
Union Pacific |
70.34% vs. industry avg. at 19.47% | 11.4% vs. industry avg. at 7.67% |
Profitability data sourced from Reuters. The list has been sorted alphabetically.
Interactive Chart: Press Play to see how analyst opinion has changed on all the stocks mentioned above.
Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.
