One result of the recent market action is the general lack of interesting charts among individual stocks, with the majority mired under their 200-day moving average in the bottom half of their 52-week trading range. Nevertheless, a little digging will reveal that there are still a number of opportunities in stocks that are within striking distance of their 52-week highs and that have the potential to break over to the upside and outperform if the market strengthens in the months ahead.
Below is a select list of 19 stocks to put on your watch list for the first quarter. These stocks are all near their 52-week highs, with a focus on those that have been moving sideways after several attempts at a breakout. At the same time, it screens out those that have risen near their high-water marks by virtue of a strong rally of 20% or more in the past month, which raises the risk of a false breakout and subsequent reversal.
The consumer, technology, and energy sectors are the most fertile ground for stocks that meet these criteria. Of the 19 stocks listed below, all closed Friday at or above their 200-day moving averages with the exception of Priceline.com (NASDAQ:PCLN).
The caveat: This isn’t a blanket buy recommendation on these companies but rather a starting point for those inclined toward technical analysis.
Consumer
| Company | Ticker | Friday Close |
52-Week High |
Change | Notes |
| Chipotle | CMG | $335.32 | $347.94 | 3.8% | Four failures at $340-$350 P/E is 52 trailing, 39 forward. |
| AutoNation | AN | $37.12 | $41.55 | 11.9% | Caution: 200-day in jeopardy of rolling over. |
| Jos. A. Bank | JOSB | $49.89 | $57.14 | 14.5% | Steady fundamentals, plus 20% short interest as of 11/30 |
| Aaron’s | AAN | $27.14 | $29.34 | 8.1% | Last breakout in February 2011 brought 40% gain in 2+ months |
| Foot Locker | FL | $23.70 | $25.50 | 7.6% | 2.8% yield, P/E near a 2.5- year low, estimates rising |
| Las Vegas Sands | LVS | $43.54 | $51.05 | 17.2% | Valuation moderating, but risk is always high with LVS |
| Priceline.com | PLCN | $481.73 | $561.88 | 16.6% | P/E from 39 to 25 in ’11, but risk of breakdown below $450 |
| J.M. Smucker | SJM | $78.80 | $80.26 | 1.9% | Caution: P/E at highest level since 2007 |
| Hormel Foods | HRL | $29.47 | $30.50 | 3.5% | Major upside likely, but steady Eddie with a 2% yield |
Technology
| company | ticker | Friday Close |
52-week high |
change | notes |
| GOOG | $633.14 | $642.96 | 1.6% | Perched at two-year resistance, near all-time low |
|
| ARM Holdings | ARMH | $27.10 | $32.18 | 18.7% | Breakdown risk in this chart; monitor carefully |
| Taiwan Semi | TSM | $12.92 | $14.05 | 8.7% | Last breakout (December ’10) brought 22% rally in next two months |
| Qualcomm | QCOM | $54.63 | $59.84 | 9.5% | Last breakout at start of 2011, 20% rally in next two months |
| Sandisk | SNDK | $50.52 | $53.60 | 6.1% | Single-digit fwd P/E; Micron reported healthy flash sales |
| Intuit | INTU | $53.10 | $56.46 | 6.3% | Caution: possible double top, near four-year high P/E |
| Rackspace | RAX | $43.31 | $46.50 | 7.4% | Caution: possible double top, P/E is 92 trailing 54 fwd |
Energy
| company | ticker | friday close |
52-week high |
change | notes |
| Royal Dutch Shell | RDS.A | $73.11 | $77.06 | 5.4% | 4.6% yield, 12 P/E; should be a top performer if oil rallies in ’12 |
| Noble Energy | NBL | $95.38 | $101.27 | 6.2% | Above-average growth, $116 consensus target |
| Anadarko Petroleum | APC | $76.67 | $85.50 | 11.5% | Good discoveries, but litigation overhang. Three fails at $85 in ’11 |
As of this writing, Daniel Putnam did not hold a position in any of the aforementioned securities.
