The month of June has commenced on a bullish note as the three major stock indices in Wall Street rose on Monday.
Nasdaq composite closed at a record high since Mar 12, primarily due to a rally in technology stocks like Apple, Microsoft and Twitter.
Apple hit an all-time high and is now very close to reaching the coveted trillionaire market cap milestone. The company unveiled its latest operation system iOS 12 at Worldwide Developers Conference on Jun 4.
Moreover, Microsoft agreed to pay $7.5 billion for the “social coding” platform GitHub. The deal is expected to strengthen its cloud platform Azure’s competitive position against Amazon Web Services (“AWS”).
Investor optimism following impressive U.S. jobs data for May somehow negates growing trade war fears. This drove gains in the Dow Jones Industrial Average (DJIA) and S&P 500 indices. The Russell 2000 also closed at a fresh all-time high.
Economic Expansion, Consumer Confidence to Drive Growth
The stock market is anticipated to continue its bullish run driven by an improving macro-economic scenario despite escalating tensions related to trade war.
Notably, the Conference Board Leading Economic Index for the United States increased in April, which supports continuing economic growth, particularly in the second half of 2018.
Moreover, per the Conference Board data, the U.S. consumer confidence in the economy recovered in May following a decline in April. It also remained near its 18-year high level after it reached the mark in February.
Further, continuing momentum at the Technology sector is a key catalyst. President Trump’s corporate tax cuts and repatriation policy have aided these companies to aggressively buyback shares and pursue strategic acquisitions.
Making The Right Choice
We believe the recent stock market upsurge presents an ideal buying opportunity. To zero in on stocks that are winning currently and have the potential to gain further, we have opted one tried and tested technique — picking stocks near their 52-week highs.
The 52-week investment strategy loosely borrows from the basics of Momentum investing. The basic idea is “buy high and sell higher”, since once a trend is established it is likely to continue.
The surge can be driven by a broad set of factors including impressive sales, robust cash flow and bullish earnings prospects. Major developments may also send stocks soaring.
However, stocks that are trading near their 52-week highs carry the risk of falling fast as the market might consider them overvalued.
It is here that the Zacks Style Score System can come in handy. We use the Zacks Momentum Style Score to pick stocks that are currently at the 52-week or near that range. The style score indicates the best time to buy a stock and take advantage of its momentum with a highest probability of success.
Back-tested results show that stocks with Momentum Style Scores of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) handily outperform other stocks.
Here, we pick five stocks that sport a Zacks Rank #1.
Stocks to Buy at 52-Week Highs as Markets Rally: Momo Inc (MOMO)
Momo Inc (NASDAQ:MOMO) provides mobile-based social networking platform primarily in China. The stock has a Momentum Score of A.
Momo hit a 52-week high at $50.82, eventually closing at $50.30 on Jun 4. The stock has soared 105.5% on a year-to-date basis.
The company has delivered positive earnings surprises in the trailing four quarters, with an average beat of 17.16%.
Earnings are expected to grow 40.68% in the current year.
Stocks to Buy at 52-Week Highs as Markets Rally: Expeditors International of Washington (EXPD)
Based in Seattle, WA, Expeditors International of Washington (NASDAQ:EXPD) is a leading third-party logistics (3PL) provider. Currently, the stock has a Momentum Score of B.
Expeditors International closed at $75.11 on Jun 4, which is close to 52-week high of $76.29. Moreover, the stock has gained 16.1% year to date.
Expeditors International has delivered positive earnings surprises in the trailing four quarters, recording an average beat of 9.92%.
Earnings growth for the current year is pegged at 23.79%.
Stocks to Buy at 52-Week Highs as Markets Rally: First Financial Northwest (FFNW)
First Financial Northwest (NASDAQ:FFNW) is the holding company of First Financial Northwest Bank. The bank offers commercial banking services in Washington. The stock has a Momentum Score of B.
First Financial closed at $19.55 on Jun 4, which is close to 52-week high of $19.72. The stock has returned 26% so far in 2018.
First Financial has delivered positive earnings surprises in two of the last four quarters, with an average beat of 37.18%.
Earnings are projected to grow 77.5% in the current year.
Stocks to Buy at 52-Week Highs as Markets Rally: IEC Electronics (IEC)
Electronic manufacturing services provider IEC Electronics (NYSEAMERICAN:IEC) is headquartered in New York. The stock has a Momentum Score of B.
IEC hit a 52-week high of $5.66 and eventually closed a tad-bit lower at 5.60 on Jun 4. The stock has surged a significant 35.9% year to date.
IEC has delivered positive earnings surprises in two of the trailing four quarters, registering an average beat of 93.75%.
Earnings are expected to jump a massive 4,800% in 2018.
Stocks to Buy at 52-Week Highs as Markets Rally: Johnson Outdoors Inc. (JOUT)
Johnson Outdoors Inc. (NASDAQ:JOUT) is a leading global outdoor recreation company that claims to turn ideas into adventure with innovative, top-quality products. The stock has a Momentum Score of B.
Johnson Outdoors hit a 52-week high at $78.48, eventually closing at $77.66 on Jun 4. The stock has surged 25.1% on a year-to-date basis.
The company has delivered positive earnings surprises in the last four quarters, with an average beat of 602.12%.
Earnings are expected to grow 28.25% in 2018.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it’s predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce “the world’s first trillionaires,” but that should still leave plenty of money for regular investors who make the right trades early.