“Magnificent Seven” components like Nvidia (NASDAQ:NVDA) aren’t the only stocks hitting new highs. As of this writing, plenty of stocks outside of the “Magnificent Seven,” and outside of the tech sector, for that matter, have recently hit record highs.
Given that major indices, such as the S&P 500 and the Dow Jones Industrial Average, have hit new highs this month, this is not surprising. However, several stocks are continuing to hit new high watermarks, even as, in recent trading days, the broad market has pulled back, following the release of a hotter-than-expected inflation print.
Company-specific catalysts are helping these stocks reach new heights, even as another wave of macro uncertainty has potentially hit the stock market once again. The question now, however, is whether this strong performance can continue.
To find out, let’s take a look at seven of these stocks hitting new highs, and see whether their latest moves are an invitation to buy, or a warning to sell.
Abercrombie & Fitch (ANF)
It’s an understatement to say that, over the past year, shares in apparel retailer Abercrombie & Fitch (NYSE:ANF) have been on fire. This stock has surged 276.3% during this time frame. In recent trading days, it has remarked on a sharply upward trajectory.
Improved fiscal results have been the key factor driving ANF stock dramatically higher. While full year results aren’t expected until March 6, forecasts call for ANF’s earnings for fiscal year ending January 2024 to come in at $6.10 per share. For reference, ANF reported earnings of just 6 cents per share last fiscal year.
Still, while Abercrombie & Fitch has been a profitable turnaround stock, it may be high time to cash out. As InvestorPlace’s Ian Bezek argued last month, it may not take much to cause operating performance to weaken again. This would likely cause a massive reversal for shares.
Berkshire Hathaway (BRK.A,BRK.B)
Berkshire Hathaway (NYSE:BRK.A,NYSE:BRK.B) is one of the stocks hitting new highs lately. Admittedly, it may not be 100% accurate to say that Berkshire, legendary investor Warren Buffett’s main investing vehicle, is a non-tech stock.
After all, investing in BRK.B provides you indirect exposure to Apple (NASDAQ:AAPL). Berkshire owns a 5.8% stake in the iPhone maker, worth around $167.6 billion.
That represents nearly 20% of the holding company’s total market cap. As you likely know, Berkshire owns a smattering of companies across multiple sectors, as well as positions in numerous publicly-traded companies.
So, with BRK.B stock knocking it out of the park lately, is it time to buy? It depends. Though some (like this Seeking Alpha commentator) believe the stock can sustain its current premium to book value (around 65%), waiting for weakness may be a better move.
Diamondback Energy (FANG)
Crude oil prices have only partially recovered recently, and natural gas prices have been trending sharply lower. However, that hasn’t stopped shares in oil & gas exploration and production company Diamondback Energy (NASDAQ:FANG) from performing strongly lately.
Of course, it’s been merger news, not energy prices, that have resulted in FANG stock climbing to a new all-time high this week.
On Feb. 12, Diamondback announced plans to acquire Endeavor Energy Resources, in a cash and stock deal. Including the value of Endeavor’s outstanding debt, this merger has a transaction value of around $26 billion.
Wall Street has reacted positively to this deal news. In large part, due to the perception that, by buying Endeavor, Diamondback is further strengthening its Permian Basin asset base.
As this deal could help FANG sustain high levels of profitability and its return of capital efforts (dividends and buybacks), more upside may lie ahead.
Interactive Brokers Group (IBKR)
Based on recent trends, it’s not surprising that Interactive Brokers Group (NASDAQ:IBKR) have been performing particularly well lately.
As InvestorPlace’s Larry Ramer recently pointed out, the stock brokerage firm is benefitting from both high interest rates and the emergence of a new bull market.
High interest rates are benefitting IBKR, as these have resulted in higher interest income on uninvested funds held in customer accounts. Increased stock market participation has resulted in Interactive Brokers’ monthly transaction volume. After becoming one stock hitting new highs, will IBKR stock keep climbing?
Current trends may persist, as rates remain elevated, but investors still get back into “risk on” mode, in anticipation of lower rates down the road, creating further transaction volume growth. Last year, there was also talk of IBKR being an AI play. Further developments supporting an AI-related bull case for IBKR could also help shares keep trending higher.
Toyota Motor (TM)
EV stocks have been tumbling. Shares in U.S.-based incumbent automaker stocks have been moving higher, but shares in Japan-based global automotive giant Toyota Motor (NYSE:TM) have been performing especially well lately.
However, don’t assume that the out-performance of TM stock will continue. As a Barron’s commentator recently argued, it’s possible that Toyota shares have performed well, simply because the company did not hype its EV pivot. U.S.-based automakers like Ford (NYSE:F) and General Motors (NYSE:GM) are suffering in the aftermath of the “EV bubble.”
Toyota’s earnings are expected to be flat during the upcoming fiscal year (ending March 2025). Unless further news about the company’s plug-in and battery electric vehicle production ramp-up efforts really excite the market, TM stock’s hot run (shares are up 60.6% over the past year) could soon end.
Waste Management (WM)
The phrase “trash is cash” has really held true lately, for Waste Management (NYSE:WM) a leader in the (what else) waste management industry. Shares are up 30.6% over the past year, and recently spiked after reporting strong quarterly results.
Waste Management has become one stock hitting new highs. Several factors may explain why the market has become very bullish about WM stock.
These include the recession-resistant nature of its business, and the company’s continued steady earnings growth. However, as a result of this excitement, WM has become pricey.
Shares currently trade for 29 times forward earnings. That’s well above WM’s historic earnings multiple in the high-teens/low-20s.
If interest rates come down lower this year as expected, this valuation may be sustainable. If not, though, this stock could be at risk of experiencing a moderate de-rating to a lower valuation.
Walmart (WMT)
Weak outlook led to a post-earnings tanking for Walmart (NYSE:WMT) last November, but shares in the leading retailer just this week completed a recovery, hitting new all-time highs.
That said, what’s likely been driving this strong performance could be a warning sign to treat carefully.
How so? Next week, Walmart releases its earnings results for the quarter ending Jan. 31, 2024. Shares have moved higher, to some extent, on the expectation that robust spending during the holiday season means an increased likelihood that the company will beat on earnings. However, if results (or updates to guidance) fail to wow the market, WMT stock could quickly give back its latest gains.
That’s not to say that Walmart will soon retreat back to the low $150s per share, but if you’ve been looking to enter a long-term position in the retailer, a much better entry point could soon emerge.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
