More Room to Run: 3 Stocks to Buy at 52-Week Highs
When investors are looking for hot stocks to buy now, they usually look at 52-week high stocks. They want high-performing stocks that still have room to run.
Known as “relative strength,” active investors and traders often search out stocks that have strong bullish momentum. They are looking for names that have more strength relative to the major indices — like the S&P 500 or the Nasdaq.
These stocks may have some fundamental drawbacks — like a lack of profit or a high valuation — but what they lack in fundamentals, they tend to make up for when it comes to technical analysis. Using this analysis can help investors discover stocks with more room to run.
The only problem? Once the technicals falter, the stocks tend to decline. Let’s look at some stocks making 52-week highs.
Meta (META)
By far the best-performing FAANG stock this year, Meta (NASDAQ:META) has been trouncing its peers in year-to-date performance. The stock is up more than 130% so far in 2023, easily beating Amazon (NASDAQ:AMZN), the next-best performer which has gained over 45% year-to-date.
While all of FAANG has been impressive this year — the worst component is still up roughly 30% — Meta has been the leader. The rally has allowed its market capitalization to swell to $750 billion.
Can it keep going? It depends on tech!
Technology stocks and the Nasdaq have led the stock market rally of 2023. If they can continue to do — FAANG included — then I would expect Meta stock to continue to perform well. If there is a rotation out of tech and/or equities as a whole, then Meta may struggle.
See that its uptrend continues to hold before sticking with it on the long side.
DraftKings (DKNG)
DraftKings (NASDAQ:DKNG) has been popping up all over traders’ scans looking for 52-week high stocks.
This name was a post-Covid favorite. As professional sports resumed play and as online sports gambling continued to gain ground on a state-by-state basis, DraftKings stock saw its stock price explode. It also helped that growth stocks were surging higher overall.
From the 2020 low to the highs about a year later, shares rallied 600%. As fun as their gains were, there was very little mercy on the way down, with shares suffering a peak-to-trough decline of 86.7%. DraftKings entered 2023 close to its 52-week low, but has found a way to march higher since. After some steady consolidation, DraftKings stock just broke out over stiff resistance around $26.50.
The ARK Innovation ETF (NYSEARCA:ARKK), which is used as a proxy for growth stocks, continues to trade quite well too. It’s looking like it may break out over its first-quarter and second-quarter high.
For what it’s worth, DraftKings is a top-10 holding in the ARKK ETF (and combined for all of Ark’s holdings). If growth stocks keep trading well, then DraftKings may continue to outperform alongside other high performing stocks.
Delta Air Lines (DAL)
Delta Air Lines (NYSE:DAL) is a tricky one. Although shares have been exploding higher, the recent rally has investors worried that shares are due for a pullback. After all, the travel space has not been an easy trade for the bulls.
That said, the situation here seems to have some sustainability.
First, Delta is one of the new 52-week high stocks that has continuously hit new annual highs since late-June. The stock is up more than 40% from the May 24 low, rallying 25 of the past 30 sessions. Of those five down days, only one resulted in a daily loss in excess of 1%. At one point in that stretch, shares finished higher in 15 straight sessions.
Second, on June 30 the Transportation Security Administration (TSA) recorded the “highest number of passengers the agency has screened on record,” so clearly the trend in travel is strong too.
However, active investors must keep this in mind: Delta reports earnings on Thursday July 13.
On the date of publication, Bret Kenwell did not have (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.
